Larger European economies lead property upturn: King Sturge

King Sturge has said that its s latest research provides some reassurance that the worst may be over for Europe's property markets even though the turbulence in euro area markets has taken the edge of an improving global outlook in recent weeks.

The latest survey of rents and yields across the Continent shows that prime rents have stabilised in a majority of office centres, with the strongest seeing a return to growth after a significant correction. Most encouraging, the report says, was the buoyancy in Central London's offices, with strong increases in supply-starved City and West End.

Other office centres are a quarter or so behind London's revival and trends in warehouse rents are also lagging. But most of the outlook is expected to improve as the year progresses and this represents an encouraging turnaround in occupier markets after only two quarters of economic recovery, according to King Sturge.

The investment upturn has been apparent since mid-2009. In early 2010, there was a further inward shift of yields, though the movements were on average less dramatic than at the end of last year. For industrials, the Paris market saw the most significant reduction, with other centres maintaining their year-end levels. For offices, the larger economies in Western Europe continued to lead, with further compression in London, Paris and Frankfurt.

Andrew Burrell, Research Partner at King Sturge, commented that: 'Looking ahead, provided the European economies can negotiate the current difficult conditions, the future is becoming brighter for property markets. The attractions of property as an asset remain clear and it’s reassuring to see investors’ interest now shifting towards good quality logistics product. We predict that good quality industrials will gain ground on offices and retail in terms of volume invested'.