Analysts at JP Morgan Chase & Co have forecasted that office buildings in London's financial district will see a 20% reduction in their value by March of the coming year.

This prediction comes as the City of London faces declining valuations, with recent data from the Investment Property Databank Index indicating an 8% decrease in value. JPMorgan analysts, including Neil Green, expressed their concerns in a client note, and as a result, they have ceased recommending clients to buy shares in The British Land Company.

The decline in valuations and outlook for the City office market has led JP Morgan to downgrade The British Land Company, which counts UBS Group AG and TP ICAP Group Plc among its tenants, from overweight to neutral. They also warned about the potential for selling pressure to increase in the market, possibly leading to asset disposals due to unrealized losses.

The City of London's office market has been affected by economic concerns, rising interest rates, and competition from London's West End. The slump in The British Land Company's stock performance has caused the firm to exit the UK FTSE 100 and MSCI's Global Standard indexes. JPMorgan estimates that passive funds may offload 83.5 million shares due to this decline.

As of midday in London, British Land's stock was down by 0.3%, contributing to a year-to-date decline of 21%. Since JPMorgan upgraded the stock to overweight in June 2021, it has fallen by 36%. Photo by Tristan Surtel, Wikimedia commons.