West End feels offices slump

The slump in the London office market has finally hit areas of the West End favoured by some of the world's richest hedge funds.

Property agent Atisreal reports that just £85 million of offices changed hands in St James's in the first half of this year compared with £330 million across the whole of 2007.

Gregor Wallace, associate director of West End investment at Atisreal, said: "The overall transaction volume for St James's is down by about 50%, and this is being propped up by overseas investors' demand for trophy buildings. The West End market is now witnessing the same issues as other sectors of the market, namely that vendors' price aspirations are still out of kilter with buyers' opinions."

However, a combination of lack of supply and the attraction of St James's to hedge funds and boutique investment houses means demand among tenants is still booming.