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LONDON: Prime central business district (CBD) office markets in Europe have bottomed out and are showing trends of rental recovery, predicts Savills, a global real estate services provider.
According to the firm's pan-European index of prime CBD office rental growth markets, the UK, Sweden and Germany will have the most significant growth in 2012, with average rents are expected to rise by 11.1% in London's West End, 7.9% in Stockholm and 3.5% in Berlin.
However, the firm's long term forecast shows a significant rental growth in Madrid and Milan. Growth is expected to hover between 8.5% and 4% respectively in 2015, boosted in Italy by the positive impact expected to result from Expo 2015.
On a separate note, average prime rental growth of 2.1% in the Parisian CBD is expected over the next five years.
Eri Mitsostergiou, director in European Research, says: "European property markets have felt the impact of a slowdown in the Eurozone's economy in the second quarter of 2011 with overall investment and occupational activity plateauing. However, assuming that the problems in Greece do not turn into a wider disorderly default, our pan-European rental index shows that overall prime CBD office markets are gradually on the road to rental recovery."
In Germany, where the economy is better compared to the rest of the Eurozone, Savills expect rental values will be fuelled by an increasing demand for office space in all major zones. The firm anticipates that new office space, which is expected to come onto the market from 2013 onwards, will reduce rental growth rates in Germany from 2013 to 2015.
A slowdown is predicted to happen in the Swedish capital in 2013 too. Subtantial vacancy is predicted in the Stockholm CBD as a result of the relocation of two of the largest Nordic Banks — SEB and Swedbank — to new suburban developments.
Savills plc is a global real estate services provider listed on the London Stock Exchange. The firm has 200 offices and associates throughout the Americas, the UK, continental Europe, Asia Pacific, Africa and the Middle East, offering a broad range of specialist advisory, management and transactional services.
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