Savills: Q4 2022 sees Europe and Middle East office yields adjust at fastest pace this cycle
20 February 2023
Manchester, Prague, Amsterdam, Milan and Paris La Defense have all moved out by 100 bps since Q1 2022, while Paris CBD, Brussels, Madrid, Cologne, Munich and Berlin each moved out by 90 bps, says the international real estate advisor. Overall, EME prime capital values have corrected by an average of 18% since Q1 2022.
Mike Barnes, Associate Director European Research at Savills, says: “The IPF’s latest European rental growth forecasts indicate a modest average 1.9% prime rental growth per annum for the office markets that we track.
“Prime rental growth over the past 12 months has averaged 5.5% according to our data, and with resilient occupier requirements for green space, office based employment growth and a shortage of new Grade A supply, there is a case to suggest that rental growth could exceed 3% per annum over the next five years, lifting current valuations.”
Chris Gillum, Head of Offices, European Capital Markets at Savills, says: “We are expecting a game of two halves in 2023 with European office sellers and buyers becoming more realistic as the year progresses.
“As pricing becomes more transparent, this should encourage more sellers to bring product to the market at the right price, unlocking liquidity.”
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