Jeremy Helsby, the new chief executive of Savills, probably has one of the best vantages over European property markets.

So his perspective that prices of central London commercial property — dominated by the City office market but including a handful of prime retail sites — look to be bottoming out after 10 months of savage falls is reassuring.

Buyers are at last queueing up, led by German funds enriched by the strong euro, but supported by an increasing number of "vulture funds".

The problem is that vendors are still thin on the ground now that most UK property funds have stemmed their redemptions and are no longer forced sellers. Wait a few months however and it is likely that volumes will begin to return to normal quarterly levels.

Prices of prime central London offices have fallen about 25 per cent since the peak reached last summer. New buildings let on long leases and to blue chip tenants in the West End and the City and are now starting to change hands on yields of between 5.25 per cent and 5.5 per cent compared with yields as low as 4 per cent to 4.25 per cent between March and June last year. Once the price of debt starts to come down, an initial yield of 5.5 per cent will quickly look attractive to UK pension funds looking for long term returns to match their liabilities.

Prices of secondary commercial property in the regions still has some way to fall, Mr Helsby predicts. Banks may start turning the screw on highly leveraged private investors that bought up Britain's older provincial shopping centres and tired high street shops over the past two years for them to become forced sellers.

On residential, Savills’s volumes in London are down about 40 per cent so far this year. But again once sufficient numbers of sellers in London start pushing prices down to meet buyers’ expectations, volumes should return. Potential City job losses aside, the fundamental long-term demand for living and working in the capital is undiminished.

Savills shares today moved up 11.75p today to 280p as investors began to buy into this theory, aware that as soon as transaction volumes increase, Savills will prosper. The price of property is important but not nearly as influential on the fortunes of Savills as the volume of deals its agents handle.

Savills' shares have fallen from a high of 700p, hit exactly a year ago, meaning its fall from grace has been far harder than the demise of the quoted commercial property sector it serves.

Investors should note that last year commercial property transactions accounted for 35 per cent of group profits and residential transactions 20 per cent. Of the remainder 26 per cent came from consultancy, 10 per cent from property management and 5 per cent each from financial services and fund management. Business from this part of the business — 45 per cent of last year's group earnings — has been largely unaffected by the credit crunch.

With transaction volumes set to return in the medium term and non-transactional work still healthy, the fall in Savills' shares, at just eight times current-year earnings, appears overdone. Buy

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