Investment activity in the Central London office sector jumped last month as the progress of the UK’s Covid vaccination programme bolstered buyer confidence, City A.M. can reveal.
In the City of London, £346.55m was transacted across four deals in February, compared to just £30.96m in the previous month.
Investment in the Square Mile was down 30 per cent compared to February last year, before the coronavirus pandemic struck, but confidence to complete deals has jumped as the UK pushed ahead with its vaccination programme.
Meanwhile, in the West End, investment volume totalled £322m in February – spread across seven deals – up from a record low of £130m in January, according to research by estate agent chain Savills.
The real estate advisor said investor interest in London has bounced back over the past four weeks, despite the fact that a return to the office has not yet been directly addressed by the government.
The progress of the UK’s vaccination programme and the goal of all social distancing measures by late June has given investors the confidence to complete deals.
However, most investor interest is currently toward assets marketed last year, as many vendors are reluctant to bring new properties to the market while uncertainty remains.
Many are deferring coming to market until the current coronavirus lockdown is at least eased slightly.
Stephen Down, head of central London investment at Savills, said: “ As the market gains momentum, February’s figures are a positive step in the right direction, and the first quarter overall is likely to be further bolstered by several other deals transacted in early March.
“Buyers are becoming increasingly bullish on the prospect of an economic recovery and London returning to something resembling ‘normality’ sooner than anticipated and ahead of some other European CBD markets where vaccination programmes have got off to a slow start, so are looking towards the City to satisfy their requirements.
“However, mirroring the recovery pattern seen after other recessions, the focus is on best-in-class assets delivering strong income, mirroring the flight to quality seen in the occupational markets.”
Separate research published this morning by property consultants Bidwells revealed that investor interest in London-based offices has rebounded from last year.
Overseas investors are dominating the market by completing £4.3bn of deals during the last quarter, the research found, encouraged by the UK’s vaccine roll out.