EU economic sentiment up, recovery set to be slow - Savills

The main economic indicators for the EU region improved for the fifth month in a row in August, but the property market is likely to be very slow, said Eri Mitsostergiou of the European research team of property consultancy Savills.

Although some markets had a pick-up in leasing activity in the second quarter of the year, the European property market as a whole is still characterised by low leasing activity and falling rents. Take-up dropped by 44% year-on-year in the first half and prime rents fell by 10.5% in the third quarter of 2009, Savills said.

Rising unemployment is still the biggest obstacle to recovery of the property market and demand is expected to drop further over the next six months in 60 of the locations in Savills’ survey. On the back of this, rents are expected to continue to drop in 70% of the locations Savills surveyed, with rents stabilising in 26. Savills expects office rents to dip 11% over the full year 2009.