EUROPE - Rental growth in Russia's major office markets outpaced most other markets in the EMEA region in the first half of the year, with London's West End market witnessing similar strong rental expansion.

In Moscow, rents surged 11% in the six-month period, while St Petersburg saw rental growth of 10%.

Rents in London's West End also increased by about 10%, according to research from property firm Colliers International.

However, most office markets in Europe, Middle East and Africa reported little change in rents on office property, according to data collected for the firm's biannual EMEA Office Rent Map showed.

Seen across the entire region, development in rents varied widely, with falls seen in Athens (-7%), Dubai (-8%) and Sofia (-8%).

These falls were mainly due to poor demand in Athens and an excess of office space in Dubai and Sofia, Colliers said.

Yields in the first half reflected the rental development picture.

Colliers said: "While a majority of the centres Colliers monitors reported flat yields or marginal compression over the first half of the year, the two main Russian markets were, again, the standout performers."

The Moscow market showed yield compression of 100 basis points, while the figure was 200bps in St Petersburg, with yields now standing at 9.5% and 11% for the cities, respectively.

Durban and Abu Dhabi also saw notable shifts in yield, at -100bps to 12% and -300bps to 10%, respectively.

"In contrast to Abu Dhabi, Dubai saw a further widening of yields, 170bps to 10.7%, reflecting further concerns over the over-supply issue in the city," Colliers said.

Looking ahead, the firm forecast the outlook for class-A rents as broadly flat throughout the region, with most centres predicting no rental growth for the next 12 months.

Weaker markets including Dubai and Sofia could expect further falls in class-A rents, while London, Moscow, Munich and Stockholm were predicted to see further increases, it said.

"However, cities such as Abu Dhabi, Brussels and Prague are expected to see some yield compression as investors seek attractive yields outside of the core office markets, which have already seen notable compression," the firm said.

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