At the end of H1 2020 commercial investment in the City of London totalled £1.77 billion, a 41 per cent decrease on H1 2019 (£2.99 billion) and the lowest since 2009 (£1.34 billion). June saw just three transactions, similar to April (three deals) and May (four deals), highlighting the unsurprising and consistent lack of investment activity over the past quarter.

However, while the headline statistics paint a somewhat melancholy picture, there are reasons to be optimistic.  Savills should know, having claimed a 57 per cent market share on all investment activity in the City in the year to date, advising on over £1 billion of transactions.

Approximately £2.62 billion is currently under offer in the City across 21 transactions, this marks a 16 per cent increase on May’s activity. Of this, £625 million of stock was put under offer in June alone across three transactions.

While there remains a lack of stock available to buy in the market, three new sales were launched in June, bringing the total volume of stock for investors to consider to approximately £1.82 billion across 34 assets.

Meanwhile, there have been formal bids on two development opportunities, both of which commanded a significant level of interest highlighting the underlying long term belief in the City of London office market.

The lack of openly available stock is the main reason for the low levels of transactional activity to date in 2020. With very little outward sign of distress (as yet) there are no forced sellers unlike in previous downturns. Furthermore, in a global investment market such as London, appealing to an international audience remains difficult due to ongoing travel restrictions which have made inspecting real estate near impossible.

Positively, as the Government relaxes its stance on lockdown and many businesses urge more ‘normal’ working practices in line with Asia and Europe, more opportunities are becoming available.

The weight of overseas capital looking to London, which has proven robust as values have largely held firm to date, is encouraging. We anticipate investment activity to remain comparatively subdued in the short term and over the summer but early signs of increased market activity are emerging.

Further information

Read more: Savills City Investment Watch