Prime yields static – Knight Frank
Knight Frank says its wide-ranging research into the prospects for European property markets this summer show that while most commercial property markets are stabilising or in recovery, with rental growth seen in several key areas, there has been little movement in prime yields across most of Europe during the past quarter.
Knight Frank says it has calculated that the weighted average European prime office rent rose 2.6% in the quarter to June, taking year-on-year growth to 5.6%. The strongest rises in rent were in Moscow (up 8% in dollars) and London’s West End (up 5.9% in sterling), with Stockholm, Paris and Frankfurt also recording substantial gains. The City of London market paused during the quarter, with prime rents unchanged after their recent strong uplift, the firm notes.
Prime rents fell in Lisbon (down 2.6% in euros) and Madrid (down 1.8% in euros). While these markets remain under downward pressure, Knight Frank says the outlook for the rest of 2011 for most European markets “is one of either continued stability or mild rental growth for prime property”.
Senior international research analyst Matthew Colbourne said: “Following a significant hardening of yields in many major cities last year, the lack of recent yield movement suggests that the market is pausing for breath, as investors remain cautious over the general economic outlook and find it difficult to identify value at the prime end of the market.”
