One of the largest London office sales undertaken this year has been canceled, as macroeconomic volatility starts to impact the investment market in the UK capital — and across the globe.

Norges Bank Investment Management’s £720M sale of the 585K SF 2 King Edward Street in the City has been pulled after bids did not match the sovereign wealth fund’s price expectations, React News reported.

The building is the UK headquarters of Bank of America, which has a lease on the building to 2032. The asking price represented a yield of 4%.

Brockton Everlast, Royal London Asset Management and Hermes in a joint venture with CPPIB were among the bidders for the building, React reported. CBRE is advising Norges on the process.

Inflation has reached a 40-year high, affecting consumer spending power, and requiring a rise in interest rates from the Bank of England. Those factors plus the uncertainty created by the war in Ukraine have combined to make the investment picture for the UK far less certain than in the immediate aftermath of the pandemic, causing buyers to reassess what they are willing to pay for assets.

React said two other major disposals — the £480M sale of the Duo office building at 280 Bishopsgate in the City and the £410M sale of MidCity place in Midtown — are also progressing slowly as a result of uncertainty among buyers.

The effect is not confined to big deals in London. Earlier this month Bisnow reported that the same factors were destabilising the New York investment market.

Meanwhile, MSCI reported the number of buyers actively seeking real estate assets more than halved between the fourth quarter of last year and the second quarter of this year, to just 1,602. The number of deals under contract has fallen from €17B in March 2021 to €12B in March this year.