London rental rates 'set to rise'

05 February 2010

Written by Michael Aglony

Commercial mortgage holders looking to rent their property to clients in London could see an increase in rates.

Furthermore, UK real estate has become a very attractive investment option compared with some European markets.

This is the view of senior economist at the Royal Institution of Chartered Surveyors (RICS) Oliver Gilmartin.

"[In] the City of London market there has been a complete cut-off of development activity in the last couple of years and that is actually starting to manifest itself now in rental expectations," he explained.

There has been a lack of the highest grade A quality space in recent years, but as this situation changes there could be a speedy recovery in rents, Mr Gilmartin predicted.

However, this does depend on the strength of the global economy's recovery, he added.

The comments follow reports from Knight Frank of double-digit rental growth rates to be seen in 2010.

A 43 per cent increase in capital values has been forecast due to rising rents and falling yields, the firm noted.

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