London offices have remained a “safe haven” for investors as investment rose by 19% to £3.7bn in Q2 2016.
This brings the total volumes for the first six months of 2016 to £6.9bn, 12% ahead of the 10-year average, according to research by BNP Paribas Real Estate.
Asia Pacific investors accounted for 40% of this total, purchasing £2.6bn in assets.
Appetite from foreign investors was particularly marked in the City, where they made up 92% of capital deployed so far this year.
The acquisition of Aldgate Tower, E1, by China Life and Brookfield for £346m was the largest investment deal of the quarter.
Take-up levels for H1 2016 was 5.1m sq ft, in line with expectations following three consecutive years of above-average demand.
The slight fall in take-up is combined with a significant fall in lease lengths from 9.5 years to 7.8 years in H1 2016, showing increased cautiousness and search for greater flexibility amongst occupiers.
In the City the largest deal recorded was Beaufort House, EC3 where Amazon took 47,101 sq ft of space.
Vacancy rates rose to 5.4% in Q2 2016, up from 4.7% in Q1, which BNP Paribas said was driven by rationalisation on the part of occupiers as well as 2016 developments entering supply.
However, researchers said this was likely to be subdued in the long term as new developments are delayed due to tighter controls on funding.
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