Ewen Hill, Director of International Investment at Colliers International, said: “Cross border Investors - especially non-European - continue to target primarily safe haven markets. However there are signs that some are willing to take more risk and increase exposure to more peripheral markets. Italy and Spain have seen a sharp rebound in office investment year-on-year (+357% and +110% respectively)’ although from a low base.  It is notable that some Asian investors, traditionally focused on London office property, have begun to look beyond Tier 1 cities.” 


Central and Eastern Europe (including Russia) also saw a significant increase in office investment volumes (more than 90%) in comparison to the first half of 2012, with Moscow and Warsaw attracting more than 80% of the capital.

Ewen Hill, said: “The increase in transactions in peripheral markets partly reflects the perception that the threat posed by the Eurozone crisis has diminished compared to its peak last year. With the Eurozone finally exiting recession and continuing improvement in economic sentiment in the EU since April, we are close to the tipping point of economic recovery in Europe.”

Recent political turmoil in southern Europe however is a reminder that the crisis could reignite should austerity programmes lose political support and growth remain elusive for too long.  The core of the Eurozone is not immune from further economic deterioration either, with France’s situation being closely monitored due to more anticipated austerity programmes, despite positive growth in Q2.  

Other policy issues need to also be addressed. Central banks in particular will face the delicate task of ensuring that an inevitable normalisation of monetary conditions, sooner or later, do not spook companies and jeopardise the recovery.



In H1, prime rents increased in some of the big-6 German cities despite a slowdown in leasing activity. Increases were also registered in Vienna, Amsterdam and Moscow. By contrast, falls remained mostly concentrated in parts of southern Europe, although the pace of rental decline has eased.

Craig Satchwell, Head of West End Offices, at Colliers International, said: “Rental growth remains uneven across Europe, reflecting the two-speed nature of current economic recovery. On an individual city level, data shows that rents for CBD office space have generally proved most resilient. This is partly because of the lower supply and, typically, occupiers’ preference for centrally located building with good amenities.

“The TMT and Business Services sectors were among the main contributors, with the former particularly active in London, Lisbon and Barcelona.”

Whilst prime office yields are generally stable - with some modest compression observed in Munich, Stuttgart and Amsterdam - further compression is still anticipated in Frankfurt, Hamburg, Paris and Oslo. Downward pressure will persist in southern Europe, but with a stabilisation expected in CBDs.

Occupier demand will continue to influence rents around Europe. Prime values are now believed to be near their cyclical peak in Germany. Increases in the next 12 months are anticipated in Vienna, Munich, Oslo and possibly Amsterdam.