Investment in London’s commercial real estate market fell 50% in 2016, while Germany became the most active national market in Europe, according to Real Capital Analytics (RCA).

RCA cited the possibility of a drop in tenant demand in London and high prices at a mature stage of the market the cycle as reasons behind a drop in annual investment to €25.2bn.

Nevertheless, London was still Europe’s biggest city market, with almost 20% more investment than nearest rival, Paris.

Tom Leahy, RCA senior director of EMEA analytics, said the UK was “already close to a tipping point in the investment cycle before the Brexit vote, with price growth moderating and investment volumes slowing”.

He said: “The weaker pound attracted a different profile of overseas investor to central London during the second half – newcomers and those who found an opportunity in a market that is still adjusting to the new pricing dynamics.

“More frequent investors in the market were conspicuous by their absence.”

In the UK, transactions in the fourth quarter of 2016 fell 45% over the same period in 2015 to almost €14.3 bn. Amplifying the slide was the depreciation of the pound following the Brexit vote. In local currency terms, the drop in investment was 35% last year.

The UK accounted for half of the top 10 single property deals by value in spite of the slide in overall investment volumes.

Germany was Europe’s biggest national market for commercial real estate investment in 2016, a year of mixed performances across the continent.

Leahy said: “Germany replaced the UK as the destination of choice for real estate investors in Europe following the Brexit vote in June and as Europe faces potentially more political, economic and monetary upheaval later this year.

“The final three months of last year were, nevertheless, the third strongest quarter on record, which shows the underlying strength of the broader market.

“National real estate markets across the region are at different stages of the investment cycle and this disparity, as well as some county-specific issues, explains the mixed picture for Europe last year.”

Commercial property deals completed in Europe last year totalled €255bn, a 21% drop from the record year of 2015.

RCA said the slide was due to the weakness of the three largest markets: transaction volumes fell by 19% in Germany, 43% in the UK and 21% in France.