Europe's office markets are continuing to move at different speeds on the back of a faltering economic recovery, with the yield gap between cities remaining wide, according to King Sturge's latest European Property Indicators report. At 5%, the lowest yields are still to be found in Copenhagen, unchanged since mid-2008, with the highest in Moscow, where yields are currently estimated to be around 15%.
Europe's office markets are continuing to move at different speeds on the back of a faltering economic recovery, with the yield gap between cities remaining wide, according to King Sturge's latest European Property Indicators report. At 5%, the lowest yields are still to be found in Copenhagen, unchanged since mid-2008, with the highest in Moscow, where yields are currently estimated to be around 15%.
More than half of the 23 cities surveyed expect prime rents to remain at current levels during the first half of 2010, with the City of London the only location where an upturn is expected. The transition to rental growth may extend beyond London during 2010, as tighter supply conditions and improving demand start to impact positively on occupational markets, King Sturge said.
Yields appear to have reached a floor, with a growing number of cities having seen no further deterioration since mid-2009. The City of London was one of the first centres to register an inward shift in prime yields in 2009, and continued to see movement in the fourth quarter, when prime yields fell by 75bp to 5.75%. Paris followed London’s lead, with prime yields adjusting to 5.50%. Outside the eurozone, Oslo was the only Nordic city to register a fall over the quarter, with prime yields adjusting 25bp to 6.25%. Prague and Warsaw also saw yields move in 25bp in the 2009 final quarter to 7% and 6.75% respectively.