Despite property prices still falling in the entire UK, commercial office space in the Greater London area experienced a growth of 22%. With the financial and ancillary sector expanding again, short demand was made responsible for the sharp increase in value.

According to the latest release of the Royal Institution of Chartered Surveyors (RICS), residential as well as commercial properties are experiencing a boom in the London area, despite overall UK rates of rental expectations declining for the third year in a row. Retail and industrial rents, in contrast are expected to continue slipping. Retail rents are expected to pick up later in the year, as a result of the recovering economy.

Construction lending was minimal throughout the month of February, with lenders concentrating on civil engineering and commercial buildings. The 9% increase achieved in construction was not able to satisfy the growing demand in the sector.

Still, London figures are usually outperforming other parts of the UK, with all sectors doing much better in the nation’s capital. Customers that saw themselves forced to look outside London for their office space nevertheless brought much needed growth to areas south of the city.

The UK still has some hard roads to travel before coming out of its current economic slump. Restricted lending and increase building material costs along with insufficient demand are holding back any form of short term recoveries in construction”, said Kaye Herald, managing Director at RICS.