Landlords in London and the South East of England are regularly selling older offices for 20% under their asking price.

This is down to the increased costs of renovation and finance, according to Robert Haigh, a valuations expert at Fisher German’s London office. He said: “There are plenty of older offices that could do with significant refurbishment to get them to the specifications needed to command higher rents, which has commonly left their landlords with a choice.

“Should they bear the cost of refurbishment and earn their money back through rents from prospective high-paying tenants, or should they sell up and let another party bear the risk? More recently, landlords have been opting for the latter, to the point where many agents who are putting the properties on the market are widely overstating their value.

“High interest rates and uncertainty around further inflation in build costs have made investors cautious, and for many the perceived risk weighs heavily on their mind when calculating projected returns, causing the disconnect between asking prices and transactional evidence. The high cost of borrowing also affects the landlords, who are struggling to afford the vastly increased costs and risks of going through with a refurbishment.”

Haigh said there is a ‘two-tier market’ at the moment, where pricing for modern ‘green’ offices is extremely high compared to historic buildings.