Investment volumes for central London’ commercial property market are 46% down on 2019 with £4.4bn transacted by the end of the third quarter, according to Savills.

In 2019 more than £8bn was invested between January and October.

Investment volumes for the year to date are also 58% down on the five-year rolling average.

In the third quarter, £1.3bn of commercial property was transacted in the capital, with acquisitions including CBRE Global Investors’ purchase of 6 Brewhouse Yard, EC1, in July 2020 for £29.6m and CLI Dartriver’s acquisition of the long leasehold of Liberty Place, 4-12 Norton Folgate, E1, for £30.5m in September.

Despite the reduced activity, Savills reported that prime yields remained at 4% in the City and 3.75% in the West End.

Less overseas activity has also meant that for the first time since 2006 UK investors have made up more than half of all investment activity in central London’s commercial property market.

Savills reported that domestic investors accounted for 53% of overall activity up to the end of third quarter in 2020, equating to £1.4bn, while European investors have been the top overseas investor group with a 17% market share, reflecting £1.4bn.

In the third quarter, UK investors made up 50% of all commercial property deals in the capital.

Stephen Down, head of the central London investment team at Savills, said: “Traditionally the quietest quarter for activity, Q3 in 2020 has seen investment volumes further reduced by the ongoing travel restrictions brought about by the Covid-19 pandemic preventing a large pool of global buyers from viewing properties and trading in London.

“With a huge wall of global capital looking to find a home, and a significant proportion deriving from property funds and pension vehicles that need to act before the end of the year, we are anticipating a notable uptick in investment activity in the final quarter.

“This is reflected by the increase in available stock on what has been a starved market, with circa £6.6bn of [£10m-plus] assets known to be available in London. However, not all of these buildings will sell and, as the search for core/core-plus risk-free assets becomes ever more pronounced amidst the ongoing uncertainty, the gap between prime and secondary is expected to grow, and pricing needs to reflect this.”