Companies are investing less in London office developments, amid uncertain conditions in the wider economy.
According to data collated by Knight Frank, the total expenditure on London office transactions stood at £1.6 billion during the first three months of the year.
The figure represents a significant decline from the same period last year when spending on offices was £3.6 billion.
James Roberts, head of central London research at the property consultant, blamed turmoil in the Arab world for the downbeat mood, but anticipates that a recovery will be led by sovereign wealth funds looking to capitalise on keen office space prices.
Roberts stated: “It is impossible to ignore the fact that this slowdown has coincided with an uncertain time for the global economy.
“The downbeat economic news and unrest in the Middle East has cast a shadow over sentiment, however, medium-term this will probably benefit the London investment market as we expect more sovereign wealth and oil economy interest.”
News of developments comes demand for office space in the capital surged during 2010. According to Drivers Jones Deloitte, demand was up 25 per cent over the year.