Office rents in the City of London will start rising again next year as the recovery in the economy and financial sector stimulates demand for space.

Property agent Knight Frank today forecast prime rents in the City to rise by 4% next year to £44 per square foot, after a 21% decline this year put space at its cheapest level for 20 years.

It also predicted that between now and 2013, rents will rise by 37% to £58 per square foot in the City and by 42% to £92.50 in the West End.

Bradley Baker, head of central London tenant representation at Knight Frank, said: “The office market is beginning to emerge from the shadow of the banking crisis. Large central London tenants from a range of industries are viewing this as the ideal time to act to secure the best deal.”

Will Beardmore-Gray, head of City leasing at Knight Frank, said: “The City has seen a marked increase in activity since its low point in quarter one. There is a definite upwards trend in activity emerging — it is certainly not a fresh boom but it is a steady return to normality.

“The current wave of demand in partly driven by Asia-Pacific financial firms like Bank of China, Daiwa Securities, Bank of Tokyo Mitsubishi, Macquarie Group and Nomura.

“I see the City as benefiting from its status as a hub in the system of global trade.”