THE eyes of the British commercial property world are fixed firmly on an unremarkable building site in Cheapside, in the City of London.
Why should a modest development of 65,000 square feet with an estimated construction cost of only GBP14 million (about HK$160 million) have captured the interest of property executives in quite this way? It is because the project, by Wates City of London Properties, is the first significant speculative development in London's financial heartland in more than a year.
Speculative office buildings, so much a feature of the 1980s boom years, had first slowed to a trickle then dried up under the pressure of recession in Britain.
The Wates' development is widely regarded as tangible evidence that the corner has been turned.
Although not even the most optimistic property developer expects a sudden return to the heady days of the 1980s, there are a variety of indicators suggesting that property recovery is, indeed, underway.
Newly released figures show the All Property Average Yield, which measures the relationship between annual rents and purchase prices, dropped back by 0.4 per cent to 8.2 per cent in the last quarter of 1993, a figure not seen since the early months of 1990.
This declining yield does not mean that rents are lower, but that purchase prices are increasing. Although the drop is a happening throughout the country, it is sharpest in inner London.
