As of August 11, 2009, year-to-date Central London Office investment activity totalled £3.191 billion representing 54% of total activity registered in 2008 which amounted to £6.997 billion according to data provided by www.propertydata.com .
However, even the 2008 activity was quite low, representing a 65% reduction compared to investment activity in Central London office sector in 2007, when it reached £6.997 billion. Due to the rapidly declining transaction volumes, www.propertydata.com reports also rapidly rising cap rates for Central London office property between 2007 and 2009. In particular in 2007 an average cap rate of 4.58% is reported, which in 2008 increased to 5.71% and by August 2009 to 7.32%. This represents an increase of almost 300 basis points, which in case of compression of cap rates in subsequent years back to the 2007 levels or close to that will allow for significant capital gains.
Central London Office Property Yields
Source:www.propertydata.com
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