European Recovery Slow at Best

Allan Saunderson is managing editor of Property Finance Europe and a contributor to GlobeSt.com.

LONDON-Rents and development activity in many locations in Europe will continue to decline over the next six months, while vacancies will rise as the economy recovers only gradually despite the improvement in European economic sentiment, says international realtor Savills.

Prime CBD rents dropped 10.5% across Europe in third quarter, leading Savills to predict average annual CBD office rental growth for 2009 falling by around 11.0%. At the same time, average rents for 70% of 33 cities surveyed by Savills will fall over the next 6 months, while only 25% will remain stable. In development, demand will drop over the next six months, boosting supply by 65%. Average rates currently stand at 10%, 35% higher than in the first half of ’08, and these are set to rise further in most locations.