Bimethyls

Prices of office space across central London have been reduced by property owners to woo investors. This has led to significant rise in office letting. With interested tenants willing to invest in commercial property, the real estate market seems to be recovering fast from its losses.

With property values dropping due to the present economic climate, property owners in the UK have suffered significant pre-tax losses. Thus, in a desperate bid to make profit, rental companies slashed down prices to bring investors back to the market.

According to the NB Real Estate research, the first quarter of 2009 saw office letting increasing from 923,000 square feet to 1.8m square feet. But at the same time, new buildings have come up, creating new vacancies. Offices to let London rose in the city from 10.2 to 11.3pc due to new buildings and from 7.4pc to 8.4pc due to creation of vacancies in the West End area.

However, industry experts are not losing sleep over new vacancies. Accountancy firm BDO Stoy Hayward reported that despite the vacancies, the market is seeing an improvement in investor returns, which have risen from -5.27pc at the beginning of 2009 to -.9pc. Currently, commercial property market in the UK is witnessing the highest investor level recorded in almost a year.

Once commercial areas start showing higher occupancy, companies can start thinking of pushing up their office space rentals. This will generate more profits in the real estate industry, hopefully helping the industry recover.