EUROPE – A forecast of prime rents in 29 European cities shows London recovering and Paris La Defense faltering, but Oslo leading – most likely as a result of investor perceptions of 'safe haven' markets.
The report, commissioned by the IPF and based on independent forecasts from 15 fund managers and advisers, suggests that a wholesale euro-zone return to prime rental growth could take five years to emerge.
Even then, Lisbon, Rome and Milan will continue to struggle.
Overall, 17 of the 29 cities studied anticipated some prime rental growth for 2012, compared with 12 six months ago.
Of these, nine are expected to show growth of above 2%.
The remaining 12 are expected to return a decline in rental values over the year, including most cities attached to peripheral economies expected to return negative growth of below -3%.
Following relatively optimistic expectations for some cities this year, only nine are expected to deliver more than 1% growth next year, and 17 in 2014.
Measured over three years, 19 cities are expected to return positive growth.
According to the researchers, more upbeat projections in November than May – with the forecasts for 19 markets having picked up in the past six months – could indicate a strengthening of sentiment.
Although they attributed investors' cautious position vis-à-vis peripheral economies to failure to resolve the sovereign debt crisis, the report's authors warned against over-optimism for markets outside the euro-zone, pointing out that they were "not immune to the issues affecting their neighbours".
Oslo's expected 7.8% growth this year represents an increase from 6.7% in May, but is still significantly lower than 14.5% in 2011.
Meanwhile, London City is expected to return 2.8% in 2012, an increase from 0.1% in May, and London's West End is expected to return 3.7% over three years.
The City, London's West End and Oslo are three of the four cities expected to return more than 3% annual growth in 2013. Moscow is the fourth.
Despite improved forecasts for Paris's central business district, La Defense is expected to fall 4.1% over this year.