A tentative recovery in office rents is emerging globally helped by improved economic activity, with rental growth starting to speed up in the first quarter in the major financial markets of London and Hong Kong, said a report.

London's West End and Hong Kong joined London City in the first quarter of 2010 as the first markets to begin to see rents recover, with rental declines also starting to level off in Sydney and Shanghai, property consultancy CB Richard Ellis said on Wednesday.

Increased demand for space, together with more relocation activity, has also slowed rental declines in the majority of global office markets, including Washington DC and Mexico City, the real estate specialist said.

"Relocations continue to be the main driver of activity, but there are also signs of expansion activity in a few markets, including Paris and Sydney," Raymond Torto, CBRE's global chief economist, said.

CBRE said the global economic recovery, characterised by stronger growth in emerging markets such as India and China rather than in developed markets such as the US, UK and Japan, is being reflected in property markets around the world.

Office rents are at the bottom of the cycle, or starting to grow, in many emerging Asian markets such as Mumbai, New Delhi and Beijing, as well as in major Latin American cities, it said.

The recovery is so far largely constrained to higher grade, prime offices however, as occupiers upgrade and leave older properties vacant, and it may take significantly longer for rents across all submarkets to recover, CBRE said.

In a separate report, the consultancy predicted European commercial real estate investment sales will reach over 100 billion euros ($124 billion) in 2010, up from 73 billion last year, boosted by investor demand for prime properties. – Reuters