Tight supply and rising confidence among financial tenants are expected to boost office rentals in London in 2010, reports property consultant King Sturge.

After falling up to 40 percent in the global financial crisis, prime rents in the London financial district may rise 10 percent by the end of 2010. Rents in the West End are forecast to increase by 7.6 percent. This would mean average rents in the city of London of $77 (£47.50) per square foot and in the West End of $114 (£70) per square foot.

The predicted improvement in rents may ease investor fears that the UK commercial property market’s price rebound could be short-lived due to continued tenant weakness.

While London is poised for recovery, in the rest of the UK, King Sturge predicts rents will continue falling due to weak demand, although at a slower pace than in 2009. Experts have said the poor outlook for the regional markets could further widen a pricing gap between prime commercial properties and lower-grade assets, and this could postpone a general recovery in the sector by five years or more.