Ross Clark

Is this a once-in-a-generation chance to invest in central London?

[iStock]

Buy when there is gunfire on the streets, goes the old adage. But could this be a case of the right time to buy being when there is, well, hardly anything happening on the streets?

Few investments have been as hard hit by Covid-19 as commercial property in central London. As shops and restaurants have been closed, and office staff made to work from home, landlords have struggled to collect their rent. In the six months to September, for example, Shaftesbury, which owns 600 buildings in the West End including 1.9 million square foot of retail and office space, managed to collect only 41 per cent of what was due, falling to 36 per cent in January.

Moreover, many people believe that there will be a permanent shift in the way we work and spend our leisure time. Even when the Covid crisis is over, they argue, we will still want to work from home, and our leisure activities will be focused closer to where we live, with suburbs and small towns benefiting at the expense of large cities. Central London, in other words, faces a future as a relative backwater.

It could be a once-in-a-generation opportunity to buy a piece of central London on the cheap

But just when you think a trend has been established, along comes something to challenge it. If some people are going to be able to look forward to a future working via their laptops in the country or suburbs, they won’t, it seems, include Goldman Sachs employees. The firm’s CEO, David Solomon, last week described working from home as an ‘aberration’ that will be ‘corrected’ at the earliest opportunity.

While there are companies that take the opposite line — HSBC says it aims to reduce its office footprint by 40 per cent over time, with more people working remotely — I wouldn’t want to bet against Solomon’s aversion to working from home being the better indicator of the future direction for the office market.

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