London has recorded its third consecutive quarter of rising commercial property investment, according to new statistics published by property adviser Cushman & Wakefield (C&W). In the fourth quarter investment volumes rose to £3.1 bn (EUR 3.5 bn), up from £1.6 bn in Q3, for an annual total of £6.81bn.

Although 2009 marked the first time since 2006 that London investment has risen for three consecutive quarters, the year's total remained short of 2008's total of £6.99 bn and just 35% of 2007's record total of £19.42 bn.

The overall annual decline is down to the continuing economic downturn and the shortage of supply of assets on the market. The main sources of supply including REITs and funds were largely out of the market for 2009 and the expected sell off of distressed assets by the banks did not materialise. Demand did increase through the year, however, which encouraged more sellers and quarterly volumes therefore rose from just £679 mln in Q1.

The West End market in 2009 saw £3.1 bn of volumes, slightly down on 2008's total of £3.5 bn. The City & Docklands market in contrast had a better year than 2008 with £3.7 bn invested against £3.5 bn. Encouragingly, turnover in the City & Docklands market in Q4 2009 was more than three times greater than Q4 2008 with around 90% of acquisitions made by international investors.

'The outlook for 2010 is certainly for investor appetite to continue,' said Bill Tyser, head of City investment, at C&W. 'It remains to be seen where the buying opportunities will come from but there is a sense that more stock will come from the banks which will see the benefit of hardening yields and rising prices as an indicator to reduce some of their exposure.'