30 January 2023 15 minute read
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Brexit and the post-COVID shift in working patterns have changed the landscape of London real estate. But the city remains well-positioned as a key hub in the global knowledge economy, as Jonathan Bayfield, James Stevens and Ed Atterwill explain.

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Why London remains the ultimate city of the future

The UK has endured a turbulent period since 2016. Brexit changed the country’s relationship with its largest trading partner, the European Union (EU). COVID-19 put extreme pressure on public finances and led to fundamental shifts in working patterns.

However, the UK retains major strengths, nowhere more so than in the capital. London remains a global knowledge hub and a fulcrum for capital and innovation; a place where industry clusters fizz with creativity and ideas. The city’s scale and world-class culture continue to attract bright students and highly skilled workers.

While these characteristics remain intact, the disruptions of recent years have affected the city’s property markets in a variety of ways. Office occupancy rates have dropped as more people work flexibly and remotely. And while demand is rising for high-quality, environmentally friendly buildings, weaker assets and those in peripheral locations continue to suffer.

Against this fast-changing backdrop, investors will need to adopt a selective and nuanced approach, taking into account supply-and-demand dynamics and net-zero considerations, among other factors.

In this paper, we look at the key characteristics of London’s real estate markets; examine the impact of recent political and economic developments; and analyse the relative resilience of the city’s office sub-markets. 

Our analysis shows demand is likely to remain strongest in locations with abundant amenities in the largest residential catchments, especially those that can be accessed via public transport and bicycles. Locations that currently look to provide good value to office occupiers on an average rental basis include Soho, Mayfair, Farringdon, Liverpool Street, East London’s Tech City and the area around London Bridge station (see Figure 1).

Figure 1: Map of Central London office sub-markets

Map of Central London office sub-markets

Source: Aviva Investors, November 2022.

Download Why London remains the ultimate city of the future to understand:

  • How London real estate has been affected by Brexit, COVID-19 and rising interest rates
  • How the city continues to benefit from the rise of the knowledge economy
  • The relative resilience of the city’s office sub-markets and where opportunities may lie for real estate investors

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