London’s office market saw a flurry of activity in the final months of last year, with a greater value of deals done in the final quarter than in the rest of 2020 combined.
Almost £5bn of transactions went through in the final three months of the year, according to Knight Frank. That beat the long-term £3.4bn quarterly average and surpassed the £4.5bn of deals struck in the first three quarters of the year. The fourth-quarter total took the full-year figure to £9.4bn, compared to an annual average of £12.5bn.
In December alone, more than £2bn of transactions made it over the line. The rebound came as investors moved to deploy the dry powder amassed during the quieter quarters.
Nick Braybrook, head of London capital markets at Knight Frank, said: “Once again London has demonstrated amazing resilience and liquidity in the face of adversity.”
Knight Frank’s team said the January lockdown will likely bring another slowdown in activity, but added that previous slowdowns have left significantly more stock available at the beginning of 2021 than a year ago. Clarity provided by the Brexit deal struck at the end of last year could also boost activity over the winter, the team added.
Faisal Durrani, head of London commercial research at Knight Frank, said: “Despite the UK going into Lockdown 3.0, international investors remain focused on our market, fuelled in part by the record levels of available investment opportunities.
“Following news that the UK has secured a deal with the EU and as the UK’s vaccination programme gathers pace, we expect even greater confidence to return to the market.”
Heightened demand for London assets has led to a tightening of yields in the City by 25 basis points to 4%, Durrani said, while the West End and Docklands have been stable at 3.5% and 4.75%.
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