Prime business rents to recover: Savills

Rents for prime real estate in Europe’s central business districts are set to grow in 2012, according to new research from real estate adviser Savills.

Figures from the firm’s pan-European index of prime CBD office rental growth markets show that recovery will be strongest across the short to mid-term in the UK, Sweden and Germany. Average rents are predicted to rise across the year by 11.1% in London’s West End, 7.9% in Stockholm and 3.5% Berlin in 2012.

Savills predicts that demand across Germany during 2012 will increase in all real estate sectors due to the healthier status of its economy compared to the rest of the Eurozone. However, a glut of new office space coming on to the market in 2013 threatens to reduce rental growth rates in the sector from 2013 to 2015.

In the longer term the firm also sees a partial recovery in the troubled Southern European markets where sovereign debt problems are greatest. The report forecasts significant rental growth in Madrid and Milan, at 8.5% and 4% respectively in 2015, boosted in Italy by the positive impact expected to result from Expo 2015.

Savills European research director Eri Mitsostergiou remains cautiously optimistic. ‘Assuming that the problems in Greece do not turn into a wider disorderly default, our pan-European rental index shows that overall prime CBD office markets are gradually on the road to rental recovery’, she said.