A recent report from Knight Frank has declared that the European commercial property market is staging a valiant recovery; however, the fight back, at this moment in time, remains modest.
The Knight Frank Summer 2011 European Market Indicators stated: ‘The majority of Europe’s commercial property markets are continuing to either stabilise or recover at a modest rate. In the three months since our previous report, rental growth has been observed in a number of key European markets. However, little movement in prime yields has been seen over the last quarter across most of Europe.’
The report stated that prime office rental on the continent has increased by an average of 2.6%. In the main it is the cities which you would expect, that are leading the charge; Frankfurt; London; Moscow; Paris and Stockholm.
However, Knight Frank did state that some of Europe’s marquee cities are struggling. ‘In local currency terms, Lisbon (-2.6% in €) and Madrid (-1.8% in €) were the only office markets to see prime rents fall in the last three months.’ These figures are hardly surprising when the problematic economic conditions in Portugal and Spain are considered.
Matthew Colbourne, Knight Frank’s, senior international research analyst, said: ‘Our latest report confirms a picture of continued stability in most European commercial property markets. Rental growth, albeit at a relatively modest level, has been maintained in those cities which are either benefiting from an improved economic environment or experiencing a squeeze in supply. Following a significant hardening of yields in many major cities last year, the lack of recent yield movement suggests that the market is pausing for breath, as investors remain cautious over the general economic outlook and find it difficult to identify value at the prime end of the market.’
Let us hope the European commercial property market on the whole can continue to grow, as a healthy market on the continent will certainly be of value to the UK commercial property market.
