Nervous property investors have slashed spending on central London offices by nearly £3 billion in the run-up to Brexit, new data showed on Monday.
Property firm Avison Young says £2.2 billion of purchases were agreed in the three months to September 30, down from £5.1 billion in the third quarter of 2018.
The figures are provisional as the quarter is not complete until midnight, but so far £1.6 billion of deals have been transacted in the City and £592 million of sales have been done in the West End.
Some buyers are worried about whether tenant demand for offices will be strong after Britain leaves the EU. Meanwhile there were fewer properties on the market, with some would-be buyers deciding to see if pricing improves before selling.
Chris Gore, head of City transactions, London markets, at Avison Young, said: “With global political and economic uncertainty relating to Brexit, the China/US trade war and ongoing pro-democracy protests, things are hanging in a delicate balance. No one wants to look stupid by over-paying or under-selling when the outcome remains unknown.”
However, he added that “there remains a large wall of overseas capital that is holding off until better clarity emerges”.
Separately today, Knight Frank partner Dan Gaunt said there is good occupier demand for City offices. There is 3 million square feet of space under offer — 34% higher than a year earlier.
City lettings signed for during the third quarter are on track to equal or better Q2’s total of 1.6 million square feet.
Stockbroker Numis is among firms to have agreed deals. It is taking 50,000 square feet of space at Gresham St Paul’s, a 170,000 square feet redevelopment of Schroders former HQ.
