Vienna, London City to see strongest rental growth in 2012: Savills

Vienna, London City and Paris will see the highest prime CBD rental growth in 2012 at +19%, 13.6% and 6.7% respectively, property adviser Savills said on Thursday.

Rents for prime CBD offices in core European markets are expected to increase by 1.9%, while overall growth is forecast to average 0.2%.

Savills’ European prime CBD office rental matrix shows that rents in Paris, Milan and Stockholm stood more than 15% higher than their 10-year average at the end of 2011, with Munich and London West End also achieving above-average growth rates.

The firm expects new office supply in Europe to remain low in 2012, keeping supply and demand in balance and averting a double dip scenario, especially for the core European markets.

The anticipated low supply will drive overall vacancy rates down to 10.4% in the first quarter of 2012. In terms of new supply Savills expects completions in 2012 to be 35% lower than in 2010.

Eri Mitsostergiou, European research director, said that overall demand remained in balance with supply across European office markets, creating stability for prime CBD rents. However, regional disparities remained between core and peripheral markets, ‘reflecting the difficult market conditions that persist in parts of Europe’, she noted.