THE fundamentals of a normal commercial property investment market are returning to London. To some, the demented activity of last year's investment will be missed but, to the agents-advisers, the return of the basics is cause for relief. Once again, an investment property's criteria - its location, quality of building and rental growth - will be the investor's first consideration. The reason for this reversion? Bond yields at their peak at eight per cent and currently at 7.4 per cent have made property investment purely for the sake of a secure income no longer worthwhile. Only buildings in their prime and selected trophy buildings are likely to be sold on a bond or over-rented type basis. The market was moving to a stage where deals would fit into four main categories, predicted Tony Horrell of property agents Jones Lang Wootton. It will be the small well-let and well-located investment, similar to the leasehold sale of Gartmore House at 16-18 Monument Street EC3 which sold recently for more than the GBP10 million (HK$115 million) asking price. The trophy building will always appeal to some investors, sometimes not for the most logical reasons. The sale of trophy buildings like Land Securities' Milton Gate in Moor Lane EC2, for GBP87.3 million, and Royal London Mutual Insurance's Tricton Court, in Finsbury Square EC2, have not yet been market-tested. ''We see the potential buyer as someone looking for a landmark property. The city market has still got a lot of potential and people are recognising that and seeking to increase their exposure to it,'' said Nigel Robson of the Royal London Mutual Insurance Society. The two other categories will be the still rack-rented properties and investments - those with good rental growth prospects. These include Holbud's 12 Appold Street EC2 - in the core of the city -which has just sold at a 5.25 per cent yield. Lastly, core city investments will be snapped up, just as 27 Leadenhall Street EC3 was sold in 10 days for GBP20 million to AMP Asset Management. Its previous owner bought it last year for GBP13.8 million. This leaves over-rented properties in the city's fringe area in big trouble. Of the GBP800 million on the market in EC1, 2, 3 and 4, around GBP450 million of it is on the fringe. The predominance of the fringe area product has led to a relatively slow first quarter with just GBP256 million sold in 31 transactions. A further GBP240 million is under offer. Meanwhile, city sellers are by no means unambitious, testing the uncertain market to its utmost. The recent examples of the stolid German investor attempting to turn his property bought in the last couple of years have been a surprise for the market, which had always been assured the German investor was utterly long term. David Perry, partner at London agents Gooch and Wagstaff, said: ''The normally long-term German investors have, however, seen such phenomenal growth here in their investments that they view it almost with disbelief. If the market is that volatile, they think, why not realise the gain?'' Jones Lang Wootton statistics forecast that the absorption of space in London will be 2.7 million square feet for the first half of this year. The total city office stock is slightly over 80 million square feet. Of the take-up in the first quarter this year, 84 per cent has been for Grade A office accommodation, bringing the vacancy rate of that Grade A space down to four per cent compared with the overall 14 per cent. David Green, investment agent at Erdman Lewis, warned that around 1.5 million square foot of space would be coming to the market within the next year. Future rental growth is, however, undeniable and is expected due to three reasons, according to Mark Bateman, city agency partner at Grimley J R Eve. ''The organic growth of typical city tenants, a growing shortage of Grade A space and a lowering of property rates in 1995 will lead to rental growth in the next two years,'' he said. Such is investors' growing optimism they look set to form a driving force in the city's future development.