Commercial rents in London are expected to rise by 6% on average over the next 12 months, the Royal Institution of Chartered Surveyors has said.
In its UK Commercial Market Survey, Q3 2015, the RICS said London is set to see the highest rental growth of any UK market, with demand highest for office space.
Overall, the UK office and industrial sectors are likely to experience rental growth of around 5% and 4.25% respectively over the next 12 months.
The RICS warned that permitted development rights in London are weighing heavily on the amount of available space and are contributing to the rise in rents.
It said 39% of respondents in London feel that space lost to residential is substantially bringing down supply and 56% of respondents were against PDR becoming permanent – only 22% approved.
The availability of leasable commercial space contracted over the last three months in the capital, marking the tenth consecutive quarter of declining supply.
RICS Chief Economist, Simon Rubinsohn said: “It is true that concerns over valuation have increased somewhat over the quarter with more respondents in London viewing the market as being dear, but with interest rates set to remain at or close to historically low levels for some time to come, my suspicion is that the market will continue to record healthy gains over the course of the next year.”
