2026 got off to a cautiously optimistic start with stronger than expected economic growth and improving sentiment. However, the outbreak of the war in the Middle East has shifted the outlook. Q1 ’26 investment volumes reached £1.9bn, 33% down on the 10-year quarterly average and 34% below the previous quarter. Consequently, rolling annual volumes have declined for the first time in five quarters reflecting the heightened economic and geopolitical uncertainty.
Encouragingly however, the first quarter saw 43 deals transacted over the first quarter, ahead of 37 seen on average per quarter. Seven transactions were above £100m, indicating improving signs of liquidity for larger lot sizes, particularly amongst overseas investors. Indeed, of the 22 transactions of £100m+ over the last 12 months, 10 have been acquired by cross border capital.
Overseas capital continues to be drawn to Central London with Asian investors accounting for a 25% share of Q1 volumes driven by Japanese investor Daibiru Corporation acquiring a £300m stake in Mitsubishi’s Warwick Court, Paternoster Square, EC4. Q1 also saw developer Indonesian Sinar Mas purchase Burberry’s HQ, Horseferry House, SW1 for £131.8m.
Looking forward, inflation is expected to rise and remain elevated, a view which is reflected in the Bank of England’s recent decision to delay planned interest rate cuts. Higher borrowing costs for longer may mean those investors requiring debt will remain on the sidelines impacting transactions volumes over the short term.
Nevertheless, periods of heightened uncertainty have historically reinforced Central London’s status as a global safe haven. Its deep and transparent market, underpinned by structurally strong rental growth, resilient occupier demand and a critically constrained supply of best in class space, continues to underpin investor confidence and long term capital allocation.