Rental rates for premium office space in Moscow grew by record 8% in Q2 2011, ahead of other European markets.
The new report by Knight Frank, European Market Indicators, which offers forecasts for summer 2011, shows that growth of rental rates is continuing on some European commercial property markets, and capitalisation rates are still on a modestly positive trend.
Knight Frank’s Summer 2011 European Market Indicators report shows that the majority of Europe’s commercial property markets are continuing to either stabilise or recover at a modest rate. In the three months since our previous report, rental growth has been observed in a number of key European markets. However, little movement in prime yields has been seen over the last quarter across most of Europe.
Knight Frank’s weighted average European prime office rent, calculated from the cities covered by the report, rose by 2.6% in the three months to June, taking year-on-year growth to 5.6%. The three-month increase was driven by rental rises in Moscow (+8.0% in US$), London (West End) (+5.9% in UK£), Stockholm (+4.7% in Swedish Krona), Paris (+4.0% in €) and Frankfurt (+2.9% in €). There was a pause in rental growth in the London (City) market, as prime rents remained unchanged following a strong recent uplift.
In local currency terms, Lisbon (-2.6% in €) and Madrid (-1.8% in €) were the only office markets to see prime rents fall in the last three months. The Iberian markets are among the few in Europe where prime rents remain under downward pressure. For the majority of European markets, however, the outlook for the rest of the year is one of either continued stability or mild rental growth for prime property.