As builders and developers battle it out to secure the best spaces in London, prices have steadily crept up over the last year. Savills notes that land values in the centre of the capital have seen double-digit growth in the past six months.
The firm's Development Land Index shows that prices have climbed 12.5 per cent in the last two quarters, meaning that the average value of land for residential use is now almost double that seen for hotel and office space.
Office land values in central London increased by 11.6 per cent and hotel values grew by just 5.7 per cent in the corresponding period, Savills said.
However, Yolande Barnes, head of Savills research, is wary of attaching too much significance to the increase, noting that the gains are modest in the context of previous falls.
"The renewed bout of relatively modest growth is clear evidence that developers have adjusted to the new environment of restricted debt finance, recapitalised to a modest extent and are enjoying some renewed demand for certain types of their new build product," she said.