According to Savills latest research, Europe and Middle East prime net office yields continued to move out during Q2 2023, by an average of 18 bps to 4.46%.
Berlin (-38%), Cologne (-38%) and Amsterdam (-35%) have observed the largest yield impact on capital values, the international real estate advisor said.
Mike Barnes, associate director European Research at Savills, said: 'Clearly, those previously lower yielding office markets have been most impacted by the higher debt costs, and core markets, such as the UK, Germany and France, are adjusting most quickly.
'These countries are also seeing a higher proportion of total European office investment transactions, rising from 63% to 77% year on year, as more and more investors opt for value-add product in more liquid markets.'
Chris Gillum, head of offices, European Capital Markets at Savills, said: 'The number of full equity buyers who are able to acquire large lot sizes are thin, and the bid-ask spread between buyers and sellers remains wide for core assets.
'We are therefore seeing bidding activity generally restricted to the €20-50m lot size from full equity buyers, with the caveat now that sellers are asking agents to pre-qualify buyers to ensure a smooth transaction.'
