(Feb 13): Owners of trophy London office properties are preparing a raft of sales, anticipating a long-stalled recovery in the city’s prime real estate market after deals reached a 15-year low in 2024.

Prospective sellers are pitching for brokers or preparing sales particulars on properties collectively valued at over £1 billion (US$1.24 billion or RM5.58 billion) across Britain’s capital, people with knowledge of the processes said, asking not to be identified discussing private information.

The sale instructions come after a series of false dawns for a market that has seen anaemic activity since interest rates started rising in 2022. While hopes of a revival, fuelled by rate cuts by the Bank of England last summer, were quickly snuffed out by real rates that drifted higher through the end of 2024, there have been signs over the past month that UK borrowing costs are starting to stabilise.

Rising rents are also boosting confidence as the lack of new construction creates conditions for a supply squeeze even as more tenants seek out the best new space to help lure staff back to the office.

Central London office investment totalled just £6.4 billion last year, down from even the low of £7 billion recorded in 2023, when activity collapsed following the end of the free-money era, according to data compiled by Savills plc. That’s the lowest since 2009, when the city’s real estate market was derailed by the global financial crisis, the broker’s data show.

“If you have got a strong occupational market, it is just a matter of time before investment volumes come back,” British Land Co chief executive officer Simon Carter said. “Volumes were very low in the final quarter because of that dislocation in capital markets but rates are coming back to where they were at the end of September and at that kind of level things will transact.”

Among the properties being prepared for sale are Hawley Wharf, the office and residential complex owned by Israeli billionaire Teddy Sagi’s LabTech in London’s Camden district, two people said.

Rothschild and CBRE Group Inc have been appointed to market the estate, which spans 344,800 square feet on a 4.3-acre site in north London, the people said. Bids in the region of £325 million are expected for the properties, which include 169 managed apartments and 104 stores, bars and restaurants, they added. Representatives for LabTech, CBRE and Rothschild declined to comment.

Malaysia’s Employees Provident Fund (EPF) is weighing a sale of Tower Bridge House, which it bought in 2011 for £163 million, two people said. A spokesperson for EPF did not respond to requests for comment.

Hong Kong-based Emperor International Holdings Ltd has invited brokers to pitch for a mandate to sell the Ampersand building in London’s Soho district, an office it bought for £260 million in 2017, two people said. The potential sale is part of the company’s effort to enhance its liquidity amid a broader property slump back in its home market of Hong Kong, the people said.

Divestment of non-core assets is also a condition necessary for Emperor to win consent from creditors for modifying repayment schedules on two loans last year, one of the people added. A representative for the Emperor Group did not respond to calls and emails seeking comment.

Fellow Hong Kong landlord Chinese Estates Holdings Ltd is also in the process of raising liquidity by selling London assets. It is seeking a buyer for the flagship Zara store on London’s Oxford Street, two people said. Green Street News earlier reported the planned sale of the building, which the Hong Kong company bought for about £180 million in 2016. A representative for Chinese Estates did not respond to calls and emails seeking comment.

Other potential sales in the pipeline include Mitsubishi Estate Co’s Warwick Court, an office building on Paternoster Square opposite the London Stock Exchange, two people said. No firm decision has been reached but a sale could generate more than £300 million, the people said. A Mitsubishi Estate spokesperson said a sale is always an option for the company, but nothing has been decided.

The dearth of activity has been particularly pronounced for larger buildings and has therefore hit the City of London — an area characterised by huge office towers — even harder. Just 12 properties valued at over £100 million traded in 2024, compared with a 10-year average of 38, Savills data show.

Still, the forward sale of a stake in 2 Finsbury Avenue, an under-construction skyscraper that will be home to Citadel and Citadel Securities, shows signs that the market for bigger deals may be thawing.

“This cycle has been unusual in the near absence of prime, core asset activity,” said Nick Braybrook, head of London capital markets at Knight Frank. “But there is now a growing pool of global institutional capital looking to capitalise on mis-priced London offices.”

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