Investors appear to have put Brexit fears aside in the first quarter after splurging £3.5bn on London's office market, new research reveals.
Real estate firm CBRE's quarterly figures show that total investment volumes were down 14 per cent on the previous quarter after a particularly strong end to 2015.
However, this was on par with the first quarter of last year, suggesting that uncertainty surrounding the outcome of June's EU referendum vote has yet to have a significant impact on investors' decisions.
CBRE expects this to change in the second quarter, with volumes becoming more subdued before bouncing back in the second half of the year.
Jamie Pope, head of London capital markets, said: "We are already seeing some buyers hold off on deals until they know the result of June’s EU vote, so we expect to see second quarter transaction volumes dip, before bouncing back in the second half of the year, provided Britain stays in the EU.”
The number of deals that took place in the first quarter hit a six-year low of just 43. However CBRE said the value of each individual deal was particularly high.
In fact, the three-month period smashed the record for the biggest number of transactions above £100m in any comparable quarter since CBRE's records began in 1985.
Overseas buyers taking advantage of the weak pound accounted for the lion's share of deals, spending £2.4bn on London office properties. They accounted for 67 per cent of all transactions, which was slightly down from 71 per cent in the fourth quarter of last year.
Stock levels in London rose by £1.4bn to £4.8bn at the end of the first quarter. Prime yields remained flat at 4.3 per cent and prevailed at record low levels of 3.5 per cent in the West End, and four per cent in the City.