The latest edition of the company’s quarterly UK Investment Trends report reveals that investment totalled £11.7 billion during the first quarter of the year, which is 27% down on the previous quarter although 7% above the long-term average.  Notably, however, January accounted for half of total Q1 volume, with activity tapering off significantly in the following two months.

UK-based institutional investors were among those scaling back on activity, purchasing £2.9 billion of commercial real estate in Q1 2016, the lowest quarterly total for almost three years.

The research also found that appetite remains strong for regional property assets, with £4.5 billion invested outside of London during the quarter - 6% above the five-year average.  Conversely, investment in the capital was 15% down on the five-year average, driven by a reduction in purchases by overseas buyers.

Investment into Central London offices was the lowest since the end of 2011. £2.2bn of volume was recorded in the first three months of 2016, 31% below the ten-year average and less than half of the previous quarter’s £4.6bn. Occupationally, this subsector is arguably the most exposed to a possible Brexit.

Average transaction yields continued to move in during the quarter, reaching 5.49%, suggesting that pricing has thus far not been affected by investor caution.

Ezra Nahome, CEO of Lambert Smith Hampton, said: “It’s been a quarter of two halves.  The market enjoyed a bright January, buoyed by strong momentum from the end of last year, but, predictably, volumes have tailed off since then.

“It’s no surprise that investors have taken a step back in the face of growing uncertainty over the outcome of June’s EU referendum.  We saw it in 2014 ahead of the vote on Scottish independence and we’re experiencing it again now – investors do not like uncertainty.  

“The next couple of months are likely to remain quieter and I expect to see a reduction in investment volumes in the second quarter of year. This creates opportunities for those who know where to look, and investors who can mitigate the uncertainty with strong insight are in a strong position to benefit.

“Brexit concerns aside, the market remains in a fundamentally strong position and we don’t see any reason why activity won’t bounce back if the country elects to remain part of the EU on 23 June.”