Prime yields edge downwards in EMEA: CBRE

Yields from prime commercial real estate in Europe, Middle East and Africa (EMEA) continued to edge downwards in the third quarter of 2010, according to CB Richard Ellis' latest EMEA Rents and Yields Indices.

Prime yields fell by up to 11 basis points across the office, retail and industrial sectors, representing a slightly larger fall than in Q2 2010. There was relatively little change in prime rents across the key European markets during the quarter.

Richard Holberton, director of EMEA Research, CBRE, said: 'This quarter's changes reinforce the offset in the timings of the rental and capital markets cycles. While prime rents in many markets have now stabilised, there is an absence of widespread upward momentum. This is one of the factors now tempering the downward movement of yields. Perhaps more importantly, following significant repricing in the second half of last year, many investors paused over the summer period to assess the market in light of the possible impact of government austerity measures.'

While Q3 yield shifts across the region's major commercial sectors represent slightly larger falls than recorded in Q2, the degree of movement seen over the first three quarters of 2010 remains lower than in the second half of 2009. Around a third of the markets covered across all property sectors saw some fall in prime yields in Q3, although in most cases the largest reductions were in markets that carry relatively little weight in the indices.

'A notable feature of this quarter's yield changes was the contrasting rise in a number of the UK regional office centres, including Birmingham and Manchester, reversing some of the aggressive repricing that had been seen in these markets since the end of 2008,' observed Holberton.