In face of the increasing rents in the city of London, analysts and industry players fear that the city may lose its sheen for many businesses that will begin to move out to other locations which offer benefits of lower rental costs. A shortage of desk space London and huge surge in demand has led to a hike in rents which is expected to continue for a while yet. As the effects of the recession wear off, the financial condition of most businesses is beginning to improve making it possible for them to offer higher rents for office spaces of their choice, thus boosting rental rates here.

These developments are fuelling rumors that businesses may find the high rents unattractive and begin to move out to locations where costs will be lower. The combination of these factors will increase rents by 11%, analysts believe. This is a heartening development for property developers considering that rents fell by 40% over the recessive years. However, the fears of businesses moving out are putting a dampener on any optimism here.

Property consultant King Sturge has laid these fears to rest with its recent report. It states that the rent hike notwithstanding businesses are not likely to move away from London thus giving up many huge advantages which the globally recognized business hub brings to them. Contrary to fears that banks and financial groups may relocate overseas, King Sturge says that many overseas players may opt to come into London office space from places like China and France to reap the benefits of London’s unique edge in global markets. The property group also stated that rents may touch up to £48 per sq ft by the end of this year. King Sturge’s City Chief Mark Bourne said that only a handful of businesses may actually follow through on threats to move out and really relocate.

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