The majority of office markets in EMEA have reported flat rental growth in the first two third of the year; however, at the top and bottom end of the scale a few markets have reported either very strong or very negative growth, Colliers International found when conducting research for their latest EMEA Office Rent Map. Moscow, St Petersburg and London West End show positive growth while Athens, Dubai and Sofia fall.

“Notable at the top end have been the key Russian markets—Moscow and St. Petersburg, which have reported half year rental growth of 11% and 10% respectively. The London West End market also reported a rise in rents of circa 10%. The data of Budapest shows sligh increase.” – said Kata Mazsaroff, Head of Tenant Representation at Colliers International Hungary. Markets that experienced negative growth include Athens (-7%), Dubai (-8%) and Sofia (-8%). These falls being mainly a factor of deficient demand in Athens, and an excess of office space in Dubai and Sofia.

While a majority of the centres Colliers monitors reported flat yields or marginal compression over the first half of the year, the two main Russian markets were, again, the standout performers—reporting yield compression of -100bps in Moscow and -200bps in St. Petersburg, with yields now standing at 9.5% and 11% respectively. Other markets that saw notable inward yield shifts were Durban, -100bps to 12%, and Abu Dhabi, -300bps to 10%. In contrast to Abu Dhabi, Dubai saw a further widening of yields, 170bps to 10.7%, reflecting further concerns over the over-supply issue in the city.

“Looking forward, the outlook for Class A rents is broadly positive throughout the region with the majority of centres forecasting flat expectations for the next 12 months. Some of the weaker markets such as Dubai and Sofia expect further falls in class A rents whilst major centres such as London, Moscow, Munich and Stockholm are expected to see further increases. The outlook for prime yields is flat across almost all of the cities. However, cities such as Abu Dhabi, Brussels and Prague are expected to see some yield compression as investors seek attractive yields outside of the core office markets which have already seen notable compression.” – said Kata Mazsaroff.

The Colliers International EMEA Office Rent Map includes class A rents, yields, vacancy rates and construction levels in the major markets across the region.