EMEA prime rents and yields weather economic storm: CBRE

Rents and yields are holding up at the prime end of the European real estate market, CBRE finds, despite the Continent's overall weak economic performance.

The main message of CBRE’s survey of rents and yields for Q1 2013 is the 'high degree of resilience' in the strongest markets leading to 'considerable incidence of yield improvement.'

CBRE said 20 office and retail locations saw prime yields edge lower. Among the markets were the City of London office and West End retail markets - reflecting the ongoing attraction of London as an investment destination.

Dublin, Geneva and Prague also saw a downward shift. As a result, as was the case in Q4 2012, the office and retail yields for Western Europe (the EU-15) as a whole dropped slightly. Yields for industrial property rose marginally, up by four basis points, mainly because of yields drifting out in Madrid, and despite significant improvements in Dublin and Birmingham.

The overall picture in terms of rents was one of stability, with more locations experiencing a rental increase than a decline. Rents rose in the prime retail sector, were effectively flat in the office market and edged down slightly for industrials.

CBRE said that the EU-15 Prime Retail Rent Index is now nearly 7% higher than a year ago. The slight quarter-on-quarter rise in the EU-15 Retail Rent Index was largely underpinned by growth in several of the German markets, particularly Hamburg. In the office market, rental growth in a number of northern European markets - including Berlin, Oslo and London’s West End - contrasted with further falls in Madrid, Barcelona and Milan. Few industrial locations saw any rental change.

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