Europe's prime rents and yields remain stable: CBRE

Prime rents and yields for European commercial property remained broadly stable in the final quarter (Q4) of 2011, despite continued economic uncertainty and negative sentiment across the Continent, according to new figures released by CBRE.

European prime yields have remained stable for several quarters, moving up by no more than 10 basis points in any property sector throughout 2011, while rents in the office and industrial sectors have risen by less than 1% over the same period.

Notably prime yields for office and industrial property, which had been falling slightly over the past few quarters, rose in Q4 2011. The increases during Q4 were extremely small, up by between two and four basis points, but they reflect the impact of a worsening short-term economic picture on property pricing and investor sentiment. However, the tentative nature of this change is underlined by the fact that yields rose in only 17 out of 145 markets, with the increases mainly concentrated in major Western European countries, including Belgium and the Netherlands as well as regional UK cities.

Continuing the pattern of recent quarters, prime rents saw virtually no change in any property sector across Europe in Q4 2011. The CBRE EU-15 Prime Rent Indices for office and industrial properties remained unchanged during Q4, and the retail index rose by 0.6%. There was little geographic pattern to the rental increases this quarter, except that parts of the Nordic region and CEE saw some growth.