Western European top-tier cities dominate rental growth

A top tier of western European cities are set to consolidate their current positions and see future rental growth across all sectors, while others are already stagnating or facing decreases, according to agent Gerald Eve.

In a report entitled 'the European Property Market Brief', the broker revealed a widely diverse market in which established UK, Irish and Spanish cities, in particular, are set to outperform counterparts in countries including Belgium, Germany and the Netherlands.

Barcelona is showing particularly strong prospects, with rents in the office, industrial and retail markets currently rising and forecast to continue. Dublin and London are also expected to see future rental growth across all three sectors, while Manchester and Birmingham are forecast to continue to perform well in offices and logistics space.

Poland has the most challenging prospects on the whole, with rents in Poznan expected to decrease in all three sectors over the next six months, and Warsaw facing falling rents for offices and logistics.

'This snapshot of European real estate shows a market that is in many locations confident of continuing growth over the next six months,' said Sally Bruer, partner at Gerald Eve.

Offices especially have good prospects across the continent, with a focus on the traditional business cities of Germany, France, the Benelux countries, the UK and Ireland as well as recovering Spanish markets. Logistics and retail space, meanwhile, are more stable in general, but still broadly positive with growth anticipated in resurgent economies that suffered most during the downturn. There remains, however, a subdued mood in Eastern Europe, with cities such as Warsaw, Poznan and Istanbul facing the prospect of falls in rents across sectors.

Patricia LeMarechal, partner at Gerald Eve, added: 'Cities don’t just compete with their near-neighbours, they are competing with locations across the continent, and this research clearly highlights the conurbations that have best grasped the extent of this challenge and shaped their approach accordingly.'