Company News

28 march 2012

ASTERA, an Alliance Member of BNP Paribas Real Estate, Present Market Review of European Office Real Estate.

Moscow became the second city in Europe as to volume of office space absorption.
The international partner of ASTERA, the BNP Paribas Real Estate company has published the office real estate market research carried out for 35 largest cities in Europe. According to the results of 2011 Moscow and Saint Petersburg occupied the second and the fourteenth lines respectively in terms of space absorption. The total volume of office space uptake in the largest European cities made 11.9 mln sq.m. In accordance with data of BNP Paribas Real Estate, this indicator could be compared with the 2010 level, despite the signs of decrease, which were observed at the office market of Western Europe during the last quarter of 2011.

Demand for office space remained stable at all European markets. In Paris the absorption value almost exceeded the figure of 2 mln sq.m., and the main German cities showed the results, which outdid those of 2010. Several large transactions allowed Milan and Rome to increase their indices. Moscow showed one of the highest indices of absorption volume increase, in 2011 it grew up by 40%. At the same time London results were worse than last year, and absorption volume index in cities like Brussels, Amsterdam, Vienna, Madrid and Barcelona at the end of 2011 was lower than an average value for the last 5 years.

The experts of BNP Paribas Real Estate consider stabilization of vacancy rate in office projects to be one of the most significant trends of 2011. At the same time two thirds of the largest European cities finished the year with the vacancy rate being over 10%. According to the research, in 2011 Saint Petersburg showed the highest among all European cities value of vacancy rate reduction. The reduction was almost double: from 14% down to 7.5%. At the Moscow office market the vacancy rate decreased from 17% to 11%.
In the total volume of vacant space in European cities, the share of secondary market is growing most vividly, when the volume of new supply in the majority of countries keeps decreasing. Rental rates remain stable, and only in the countries with the weakest office market these rates keep falling. As to the forecast of BNP Paribas Real Estate experts, in 2012 the demand for office space will keep going down due to low economic growth and decrease in activities at the labour market.

Total volume of investments into real estate in 35 leading cities of Europe made 63.6 bln dollars in 2011. This value is by 11% higher than the same value last year. In terms of investments volume Moscow was the 4th having multiplied the investments volume from 3’670 mln Euro up to 4’092 mln Euro. Volume of investments into real estate in Saint Petersburg increased by almost 3 times, from 600 up to 1’538 mln Euro. It allowed St. Petersburg to occupy the 11th line in European cities rating. Office real estate remains the most attractive for investment, but its share in the total volume of investments reduced from 64% to 60%. At the same time share of investments into retail increased from 15% in 2010 up to 22% in 2011.
BNP Paribas Real Estate analysts note that due to unstable economic situation in Europe the forecasts for 2012 can only be very approximate, however they are sure that there is still a large volume of moneys available for investment into commercial real estate of Europe. It will allow keeping the total volumes at the present level.
In opinion of Christophe Pino, the Head of International Research Department in BNP Paribas Real Estate, the slow recovery of European real estate markets will start not earlier than at the end of 2012, the beginning of 2013. In the short-term perspective, the market volatility will remain at the level of 2011.
According to Alexandr Voloshin, the Development Director in ASTERA, an alliance member of BNP Paribas Real Estate, under conditions of yield compression, which is actively taking place on the markets of Eastern Europe, it is possible to expect increasing interest of the foreign investors in more risky markets of BRICS countries.
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