Investors bet on London’s future with blockbuster office deals

The amount invested in City of London offices hit its highest level in four years as buyers shrugged off uncertainty over the direction of Brexit to plough hundreds of millions of pounds into a series of blockbuster deals.

While the total number of transactions across the capital since the start of this year has been down on the long-term average, investors spent a combined £536m across eight deals for buildings in the Square Mile in February, the highest in that month since 2015.

Among the largest deals was Mayfair developer Dukelease’s £121m purchase of Ibex House, an art deco Thirties block near the Tower of London, from Israeli pension fund Harel.

Stephen Down of property agent Savills, which compiled the figures, said: “Although the first quarter of any year tends to be quieter, there is undoubtedly a degree of caution in the market at the moment because of Brexit.

“However, there are a number of investors that see this as an opportunity. Those deals that are offered to the market still seem to draw in a healthy level of prospective buyers.”

The strong February contrasted with a sluggish January in which just four deals were inked, leaving the total for the first two months of the year at £647m, slightly down on the same period last year.

In the West End, London’s other major office market, investment was flat on last year at £475m. The cash came from a variety of countries, with mainland Europeans dominating deals in the West End and domestic investors making up the lion’s share of purchases in the City.

Foreign interest in London offices has continued to flourish in the years following the EU referendum as investors have taken advantage of the weak pound to place bets on the city’s long-term future.

Speaking at Mipim, the property industry’s annual conference in the south of France, the UK boss of JLL, another agent, said a no-deal Brexit could lead to another boom in overseas investment if it caused the pound to fall again.

Chris Ireland said: “There is so much unspent capital out there at the moment and the UK, in a chaotic exit, could become the biggest buying opportunity globally for that money.”

He added: “A lot of the big global investors, they’re thinking about trade wars in China, extreme politicians in lots of places, there are a lot of issues all over the place outside of Brexit.”