But so far European centres have escaped the dramatic slumps seen on the West Coast of the USA, where Silicon Valley rents fell 40% and San Francisco saw a 52% collapse in prime rental values. The hardest-hit locations in Europe are Berlin and Munich in Germany, where rents fell 12% and10% respectively. London's West End retained its position as the most expensive office market in the world, despite a fall of almost 10%. By the end of 2001 the total cost of occupying prime West End office space had fallen to $146 per sf per annum.

Other major European markets also experienced slight declines over the last six months of 2001, often returning to December 2000 rental levels. Paris, Dublin and Amsterdam prime rents fell by an average of 4%.

But Peter Damesick, Insignia's Head of Research in London, said: "Interestingly, the major regional office markets in the UK appear to be bucking this trend, with Manchester, Edinburgh and Birmingham among the minority of cities where prime rents increased in the second half of 2001.'