London Leads an Upturn in Letting Activity

At last the long-suffering investors in the British property sector have some good news, with a survey saying a majority of surveyors in the county are now reporting rising inquiries and lettings activity for the first time in more than two years.

In its report for the third quarter, the Royal Institute of Chartered Surveyors (RICS) said London was leading the commercial property recovery. The survey of RICS's members across Britain found the London commercial property market was leading the turnaround in tenant activity, with retail and office demand moving into expansionary territory at a faster pace than elsewhere.

The RICS senior economist, Oliver Gilmartin, said the results may provide the first signal that a strengthening in the global economy has filtered into multinational lettings activity, particularly for Central London offices, where the veil of pessimism towards the outlook for rents is slowly lifting.

''Industrial lettings demand is also gaining some support from the improved economic backdrop. The laggard remains the retail sector, where surveyors expect little improvement in tenant activity in the run up to the crucial Christmas trading period,'' Mr Gilmartin said.

''In the investment market, the reflationary climate coupled with a reduction in the pace of job shedding and a weaker pound is quite clearly stimulating a return of investor interest at the prime end of the commercial property market.''

He said the near-term indicators continued to point to an ongoing improvement in the fourth quarter. New inquiries to occupy business space turned positive for the first time since the downturn began and it is the first time in five years that inquires have risen in unison across all three sectors.

The survey showed that net balance, of demand and supply, currently stands at 11 per cent, up from a negative 2 per cent in the second quarter.

London is leading the rest of Britain, with inquiries for office space in the capital reaching the highest net balance since the third quarter of 2007.

The biggest rise in confidence has been in the office market followed by the industrial sector, the survey showed.

Carolyn Cummins