Central London offices remain the focus of the UK commercial property market, although there was a substantial decrease in quarterly investment levels. The total transaction volume was £2.71bn, a 65% drop compared to the £7.48bn transacted in Q4. This is unsurprising given the very large deals of the previous quarter making investment levels exceptionally high.
Yields well below long-run average
James McAdden, Associate Director, Central London Capital Markets, said: "West End offices returned 22% in the 12 months to March 2014. Capital growth accounted for 17% of this, of which 10% was due to inward yield shift. Transactional yields are around 3.5% for West End offices and 5% for City offices, both of which are well below the long-run average.
Investment volumes in London remain high
"Investment volumes in Central London remain high, although Q1 2014 was lower than Q4 2013, due to the absence of the two exceptional deals - More London and Broadgate Estate, totaling £3.4bn - that provided a major boost the Q4 figures."
For our latest report on the UK property investment market, read UKIT Q1 2014