Whereas the popular property mantra, 'location, location,
location' rings particularly true for residential property,
analysts say that with commercial property, you are more likely to
hear the words 'London, London, London'.

With the capital offering guaranteed uptake and good returns, it
is seen as a safe haven for investors and multi-nationals during
uncertain economic times:

"We're back to boom levels in the capital, given by risk-averse
global investors looking for that fabled 'safe haven', which London
is perceived as being," said Mat Oakley, Savills' head of
commercial research.

There is growing feeling that the Olympics has widened the gap
between commercial property in London and regional Britain, with
improved infrastructure and investment leading to knock-on
gains.

With relatively long leases, in some cases up to 15 years, and
responsibility for insurance and repair transferred to the tenant,
as well as 'upward-only' rent reviews, investors see London
properties as a particularly safe investment.

"It all comes down to whether you are risk averse or a risk
embracer as the answer will take you down very different routes.
The market is split between those who believe recovery is under way
- who are the minority - and those who are still waiting," says
Oakley.

"The cliché in commercial property is that it's time for prime -
and central London can demonstrate shop and office rents are
rising. But if you are prepared to take a bit more risk, step
outside London where you won't be competing with overseas buyers,"
he says.

Recent Oxford Economics' regional economic performance research
shows that London performed the strongest in the last year. However
in second place was the North West, with cities like Manchester and Liverpool
performing well, followed by the South West. Although London is a
safe haven, other areas are seen as riskier with the potential for
higher returns:

"The gap between London, where a prime office would see a 3.75
per cent yield at best, and the regions - in Birmingham or
Manchester, which could yield up to 6.25 per cent - is at its
widest in 20 years.

"Posh catchment towns such as Chester or Guildford are seeing
strong demand for high street shops and low vacancy levels. There
are opportunities to wait for recovery to hit the regions,
particularly in secondary areas. The gap will close and rents will
rise once people start believing that recovery is under way."

Flagship locations are particularly important for large brands -
if a large financial company isn't based in the Square Mile or
Canary Wharf then their identity will ultimately suffer:

"Location always comes at the forefront of every property
search. But if you drill down, the appeal of a certain location is
derived from other equally important criteria, which depend on the
sector or type of product you're looking at," says Pamela Gray from
CKD Galbraith in Edinburgh.

For example, industrial firms require
proximity to transportation networks for deliveries and access to
markets. The geographic proximity of related firms also improves
the rate of innovation within the industry, with improved
opportunities for communication and knowledge sharing.

The most popular locations are typically those with access to a
large pool of skilled Labour, traditional University towns like
Bristol, Birmingham, Edinburgh and London produce educated, highly
skilled recruits ready to start their careers.

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