Middle Eastern investors predict that rental growth will return to London, but that it will be due to under-supply rather than increased demand.
Asteco, a Middle Eastern real estate firm, has released a report that predicts the under-supply of office space will cause a fury of companies renting Grade A space.
The report also suggests that this growth will increase further as there will be less and less London office development projects, due to a lack of financial backing.
Due to a lack of availability office prices in London are expected to rise by approximately 43%.
The forecast by Knight Frank estate agents predicts that the average cost of renting an office within London will rise from £44 per sq ft to £52.50 per sq ft by the end of 2010.
Although the average price for offices varies across the city, increases are expected within specific London areas.
In the City of London office rent is expected to rise by 19% this year, whereas in the West End this is only an 11.5% increase. However, this means that the cost will be £72.50 per sq ft rather than the current £65 per sq ft.