Cash-rich individual investors and family offices are set to seize a greater chunk of the London office investment market this year as debt-reliant institutional investors step back.


Ultra high-net-worth individuals are primed to plough £2.4bn into London offices in 2023, 60% more than last year, according to Knight Frank. Based on a full-year investment prediction of £9.5bn, that would mean they accounted for 25% of the market compared to an historic 20%.

The agency’s annual London Report questioned global private investors and wealth advisers with $2.5trn (£2trn) of private capital, 46% of which said real estate was their preferred investment opportunity this year for wealth protection and income growth.

Asia-Pacific-based investors, specifically from Singapore and Australia, are predicted to invest £4bn, followed by European investors with £2.3bn and North American investors with £1.7bn.

Philip Hobley, head of London offices at Knight Frank, said prime office assets in the capital “continue to offer stable rental growth despite a challenging macroeconomic backdrop” as occupiers hunt for sustainable buildings to attract and retain talent.

“We are seeing unprecedented polarisation between ‘the best’ and ‘the rest’, with a shortage of prime office space and a risk of many lower quality, less sustainable assets becoming stranded or obsolete,” he added. “Even if occupier demand was to moderate in 2023, this would be more than compensated for by a constrained pipeline.”

The agency has tracked a total of £43.8bn of capital globally targeting London offices. Domestic investors have set aside £4.6bn, while buyers from Asia-Pacific hold the highest levels of investable capital at £19.3bn. Singaporean investors are expected to dominate capital flows from the region, with £4.8bn marked for opportunistic purchases.

Nick Braybrook, head of London capital markets at Knight Frank, said that following a period of repricing, the firm expects deal volumes to recover in 2023, “as yields for the very best prime London assets have now stabilised”.

“Investors are attracted to knowledge and innovation driven economies offering sustainable investments”, he said. “This is one of London’s strengths, with its burgeoning life sciences and innovation sectors being a major driver of growth and a strong source of leasing activity. Inflation is expected to peak in 2023 and real estate weightings in portfolios could exceed target levels because of the relative under-performance of other asset classes.”