The commercial development market in London recorded deals totalling £644m in H1 2026, a drop of 43% on the same period in 2025, according to new data from Savills.
The three months to the end of June 2026 saw £166m of deals complete, less than half the figure for the first three months of the year (£477m). The number of deals in H1 dropped from 34 last year to 25 this year, and the average lot size of £26m was below the £33m average in H1 2025.
A third of transactions in H1 involved a change of use from offices, while only 10% of the investment volume was for ground-up development. The majority of development was focused on refurbishment opportunities.
Despite the fall in activity, a significant number of deals were in progress at the end of H1. The 30 transactions under offer represent an increase of 50% on this time last year, which suggests that there is still an appetite for deals to take place, but they are just taking longer to close.
Oliver Fursdon, head of the London commercial development team at Savills, said: “These figures reflect the challenges that are facing development in the capital, with land values in particular impacting the viability of some schemes. The smaller lot sizes are attracting private investors and private equity money, which tend to focus on lower-risk sites or value-add opportunities with short-term income. The number of deals in progress is encouraging, and we would hope to see some bellwether transactions complete in the second half of the year.”
Robert Buchele, director in the London commercial development team at Savills, added: “There is a strong appetite from buyers but they are placing increasing importance on both price and location, with a clear bias to the core. Exit liquidity is the main factor delaying big deals as developers need to have an idea of who they’d be selling to once a project is completed. The rebalancing of land values should continue to move forward, which will help see more deals get over the line.”
