For London’s office investment market, the new year usually brings a flurry of ‘for sale’ signs. But with the UK’s third coronavirus lockdown stretching long into 2021, potential buyers have been left twiddling their thumbs after only a handful of buildings were put on the block in the opening six weeks of the year.

Just four properties with a combined asking price of £222m have been formally launched, according to CBRE – less than half of the figure for the same period last year when there were nine deals launched totalling £643m.

The dearth of new investment opportunities comes despite estimates earlier this month by Knight Frank that investors have as much as £46bn trained on London. As late as November last year, researchers were predicting a roaring comeback in the first quarter.

Investors and agents have put the transactional tumbleweed down to the fact that international buyers – which account for a significant amount of business in the capital – have effectively been locked out of the market since the beginning of the year.

Ross Blair, head of the UK arm of investment giant Hines, told EG: “With the London market so dominated by overseas investors in recent years, it is no surprise investment has quietened down as the majority of the buying pool is largely absent because they are unable to travel.”

James Beckham, CBRE’s head of central London investment, added that agents had been left disappointed after initially rooting for a surge in business in January.

“Whilst we had hoped for a strong first quarter to build on the fourth quarter last year, the UK lockdown and travel restrictions have constrained the investment market,” Beckham said.

Appetite remains strong

Experts agree that it is a matter of when, not if, the market stages a recovery. “Whilst it’s a slow start, we are optimistic that, with the roll-out of the vaccination programme coupled with an easing of restrictions, the second quarter of 2021 will gain momentum and the second half of the year will be buoyant,” Beckham said.

Moreover, although the number of official sale launches has been sparse, talks have continued in private, with international investors still approaching agents about off-market deals.

Stephen Down, head of central London investment at Savills, said: “The appetite for London remains and, indeed, over the course of the last few weeks we have received a significant increase in enquiries from across the globe.

“As with last year we expect to see more European appetite for our market as well as a return of Far East investors looking for good quality assets in good locations. We also witnessed a marked increase in enquiries from the US, particularly from private equity who are looking later this year for more opportunistic stock where pricing may have softened compared with this time last year.”