More offices traded in London during the second quarter of 2024 than in Q1, but volumes remained depressed as larger lot sizes continued to be elusive, according to new research from Savills.
Investment turnover reached £1.54 bn (€1.79 bn) in Q2, with 50 assets changing hands, up 12% on the previous quarter. This brought H1 investment turnover to £2.9 bn, which is down 57% on the 10-year long-term average.
Savills said the lower levels of turnover reflected a scarcity of large-scale trades in the year so far. In the West End, the average lot size traded was £31 mln, while for the City it was £23.3 mln.
However, June saw the year’s first £100m+ transaction completing at Herbal House, 8-10 Back Hill, EC1, with the Yellow Tree Group acquiring the 114,041 ft2 (10,600 m2) property.
West End investment turnover reached £2.0 bn in H1, which although up 15% on the year-earlier period, remains 40% below the long-term average as a result of the scarcity of larger sized transactions. Despite this, Savills suggests demand for West End assets remains strong as evidenced by the number of assets traded during H1 which was up 30% on the 5-year average.
UK buyers, focused on smaller assets, dominated investment activity during H1, with 33 of the 45 assets acquired in the sub £25 mln category. These purchases accounted for 44% of H1 investment.
Richard Garside, head of Central London investment at Savills, said: ‘A lack of larger £100 mln-plus trades in H1 has depressed volumes significantly but it’s reassuring to see the number of transactions creeping back up and a greater depth of interest in the stock that is currently available.’
He added: ‘With interest rates expected to continue declining, the ongoing strength of the occupational market and with the general election behind us, London becomes an even more attractive city for investors, and this should result in a more positive second half of the year.’
