Back to the office for a City property boom

INVESTMENT in City of London commercial property has been booming, data reveals this week, with January the best start to the year since 2016.

- Rhiannon Curry

Figures from agent Savills show that spending in the Square Mile and Canary Wharf hit £572.2 million last month, 55% higher than the total for the final quarter of 2022 and 80% higher than at the same point a year previously.

This January saw eight transactions and there are a further 16 buildings under offer worth a combined £1.67 billion, Savills found. In the wider sector, there are 82 properties on the market — equivalent to £3.3 billion of assets.

So why the sudden reversal in fortunes? Are investors beginning to flood the market again as the UK frees itself from the final effects of the pandemic? Or is it simply a short-term blip?

The end of 2022 was particularly bad, explained Felix Rabeneck, director in the City investment team at Savills, so 2023 almost had to be better.

“Last year was pretty terrible in terms of investment volumes,” he said. “There were just very few transactions that were struck in quarter four.”

But investors returned after Christmas with a new sense of enthusiasm.

“People aren’t necessarily out and out optimistic, but in some measured cautious way they came back feeling, we want to do business this year. So there was more positivity in the market,” Rabeneck said.