Turnover in the West End and City office investment market is set to drop by the end of the month.
Jones Lang LaSalle has forecast that West End revenue will fall to just under £2bn for the first half of 2013 - a 26% slip on sales in the first half of 2012.
City transactions are set to drop to £2.7bn - a 41% plunge.
Also by the end of the first half, City yields are expected to compress, reaching 4.75% for sub-£40m lot sizes. In the West End market, yields will remain stable at 4% for the smallest lot sizes.
Damian Corbett, lead director, central London capital markets at JLL, said: "This tightness in supply extended beyond the core market and left investors with very few options to consider. As a result, those assets in the market were subject to competitive bidding in a number of instances, and we could easily see further yield compression for best-in-class assets."
Corbett added: "Looking forward, we expect no let-up in demand from overseas investors, and we are seeing the return of UK institutions to the market."
In the leasing market, central London office take-up in April and May hit 1.5m sq ft, bolstered by a strong City performance.
Jones Lang LaSalle said the first two months of Q2 had been boosted by City pre-lets, with 868,700 sq ft of new development deals since the start of the year.
In May, the City saw the highest level of activity it has experienced since July 2010 - a 135% increase on May 2012.
In the West End, a number of rents in excess of £100 per sq ft were agreed.
Neil Prime, lead director, UK office agency at JLL, said: "As occupiers become more confident in their view of the economy, the increase in demand continues to gather some momentum. On the whole, this improved sentiment is translating into greater activity, with the number of pre-lets in place a testament to this."