Differences are becoming more apparent between the office markets in European nations that are struggling to control their sovereign debt and those that are on the periphery of the troubles. This is according to a new report from DTZ, which revealed that locations such as Italy, Ireland, Greece and Portugal offer annualised total returns that are 25 per cent greater than in other markets.
However, the organisation went on to note that despite the higher returns on offer, rental growth in these countries is "subdued". Tony McGough, global head of DTZ forecasting and strategy research, explained that the high yields in more risky markets have resulted in the compression of yields in core locations. "The impact of austerity measures across Europe on the property investment market has been to polarise markets," he stated.
Earlier this month, Jones Lang LaSalle published its European Office Property Clock, which revealed that prime rents on the continent rose by an average of 2.1 per cent in the second quarter of the year, compared to the previous three-month period. However, markets such as Madrid, Barcelona and Dublin all witnessed a decline in rents, with the sovereign debt crisis cited as putting pressure on the sector.
- Friday 16 September 2011