Investor spend on central London offices plunges as Covid-19 disrupts

Investor spend on central London offices dropped by £2 billion in the second quarter as Covid-19 hammered parts of the commercial property market, according to new research.

The second quarter this year included the Covid-19 lockdown period, when travel restrictions were in full force, physical viewings were difficult, and people were urged to work at home where possible.

Property agent Knight Frank said £612 million of central London office deals were agreed in the three months to June 30, that was down from £2.6 billion in the previous quarter. It was also lower than the same period a year earlier when £1.7 billion of transactions were recorded.

Nick Braybrook, Knight Frank’s head of London capital markets, said: “With the market essentially closed for nine out of the 12 weeks in Q2, the fall in investment volumes is unsurprising. However, whilst almost £2 billion of deals went abortive at the start of lockdown, investor demand has picked up steadily since, and it has soon become an issue of stock availability.”

He added: “We expect Southeast Asian capital, having emerged from the pandemic earlier, to dominate initially, but we will need travel restrictions lifted for there to be real depth to demand.”

Faisal Durrani, head of London commercial research at Knight Frank, said: “The elephant in the room remains the looming deadline for the government to secure a post-Brexit trading agreement with the EU. Whilst this could in theory undermine demand, London’s safe haven status and proven track record of delivering returns and providing opportunities for wealth preservation are likely to trump any Brexit concerns.”