London office values forecast to plummet

Green Street Advisors has forecast that London offices will suffer a “low double-digit fall” in values over the next two years.The forecast is based on a 10% fall in rents and an increase in yields of roughly 25 basis points.The high volume of developments set to complete in the next two years is expected to put downward pressure on rents at a time when take-up is likely to be more subdued than in recent years.However, looking further ahead, Green Street said the number of development completions in 2019-20 was likely to be lower than some commentators have forecast.“Supply does have time to brace,” said Green Street analyst Hemant Kotak. “Developers will scale back their plans, especially if rents are falling and yields increasing.”