Office prices fall 20% across Europe - Savills

Prime office space across Europe has become on average 20% cheaper, research up to the end of the third quarter of 2008 by international broker Savills has indicated. Average yields for central business districts (CBDs) across the Continent stand at 6%.

Although average prime office rents are still marginally higher across the Continent at 1.5%, this is largely due to some high positive rental growth in markets such as Istanbul and Luxembourg, the report noted. In reality, rents are softening and in many cases falling, and this is particularly evident in key CBD office areas such as Central London, Dublin, Lyon, Oslo, Brussels and Paris.

Savills said in its quarterly data bulletin that prime retail yields have also softened significantly, at between 120 to 130 points higher than a year earlier. Average industrial yields have moved out to 7.1%. The largest yield shifts have been seen in London's CBD office sector, Lyon's shopping centre market and Dublin's warehouse area.

Eri Mitsostergiou of Savills European Research department said: 'Limited transactional evidence and market instability have caused uncertainty around the current pricing levels. We believe that until liquidity is restored in the markets investors will continue to apply high risk premiums on property.'