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The latest UK commercial property survey published by the Royal Institute of Chartered Surveyors (RICS) shows that a greater number of surveyors in the UK are now reporting rising enquiries and lettings activity for the first time in over two years.

RICS said the London commercial property market is leading the turnaround in tenant activity with retail and office demand moving into 'expansionary territory' at a faster pace than elsewhere. Central and Greater London office markets saw tenant demand rise for the second consecutive quarter and at more than double the pace of the previous survey period.

About 42% more chartered surveyors reported a rise than a fall in lettings activity in Central London compared to 18% in the previous quarter. RICS noted this was the highest figure since the first quarter of 2007. Across the UK as a whole, the net balance for tenant demand has risen to 8% from a negative reading of 11% in the second quarter.

Despite the improvements in demand, rental expectations have yet to turn positive although the latest survey points to a sharp deceleration in the likely pace of rental declines across all three sectors in the run up to Christmas. The greatest turnaround in sentiment has been amongst surveyors working in the Central London office market where only modest declines in rents are expected into the fourth quarter.

For the time being, greater lettings activity continues to be supported by rising levels of inducements which rose at a similarly firm pace across all three sectors in the third quarter.

Looking ahead, near term indicators continue to point to an ongoing improvement in the fourth quarter, RICS said. New enquiries to occupy business space turned positive for the first time since the downturn got underway and it is the first time in five years that enquires have risen in unison across all three sectors.