RENTAL RECOVERY IN EUROPEAN PRIME CBD OFFICE MARKETS

In the longer term Savills forecasts significant rental growth in Madrid and Milan, at 8.5% and 4% respectively in 2015, boosted in Italy by the positive impact expected to result from Expo 2015. The firm expects to see average prime rental growth of 2.1% in the Parisian CBD over the next five years.

Eri Mitsostergiou, Director in European Research, says: “European property markets have felt the impact of a slowdown in the Eurozone’s economy in the second quarter of 2011 with overall investment and occupational activity plateauing. However, assuming that the problems in Greece do not turn into a wider disorderly default, our pan-European rental index shows that overall prime CBD office markets are gradually on the road to rental recovery.”

In Germany Savills predicts that rental values will be fuelled by an increasing demand for office space in all major markets due to the healthier status of the country’s economy compared with the rest of the Eurozone. The firm anticipates that new office space, which is expected to come onto the market from 2013 onwards, will reduce rental growth rates in Germany from 2013 to 2015.

Similarly in the Swedish capital Savills forecasts a slowdown in rental growth in the CBD from 2013 onwards due to a forecast rise in the availability of stock caused by the relocation of two of the largest Nordic Banks, SEB and Swedbank, to new suburban developments leaving substantial vacancy in Stockholm’s central CBD.