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Greece, Portugal office rents plunge on Europe woes
May 30, 2012 / 10:38 AM / 5 years ago

Greece, Portugal office rents plunge on Europe woes

LONDON, May 30 (Reuters) - Rents for the best offices in Athens and Lisbon fell to their lowest level in 17 years as the financial and political turmoil gripping Europe escalated this year, data from property consultant CBRE showed.

Rents for prime offices were 288 euros ($360) per square metre per year in Athens in the first three months of 2012, a 14 percent fall on the same period last year and the lowest since CBRE began keeping records 17 years ago.

Lisbon rents were 222 euros per square metre, the lowest since the second quarter of 1995. Elsewhere, Barcelona and Madrid rents hit a 12-year and seven-year low respectively, Dublin rents were at their cheapest in 13 years while Rome and Milan were at a four-year low.

“Rents in these countries are being kept artificially high by the euro and have further to fall,” said Matthew Richardson, director of research at Fidelity International, which has $400 million of property assets under management.

“The euro is being held up by Germany. Imagine where rents would actually be in Spain if they had the peseta.”

The most expensive European office market was London’s West End, where rents were the equivalent of 1,195 euros per square metre, followed by Moscow at an equivalent rate of 901 euros, where prime rents are rising at the fastest rate in Europe due to low supply.

An index of economic confidence among executives and consumers in the euro area fell to its lowest level since October 2009 in May, the European Commission said today.

Europe’s debt crisis hit a new hurdle this month after the Greek public rejected parties supporting the country’s bailout package at the polls, while the euro zone currency bloc appears to be heading back into recession, having registered no growth in the first quarter of this year.

Fears over a euro zone break-up also meant companies in Europe rented the lowest amount of new office space in the first quarter since the collapse of Lehman Brothers, a lull CBRE said will continue this year.

A total of 2.5 million square metres of new offices was rented in the period, an eight-year low discounting the six-month period following the US investment bank’s demise that sent financial markets into a tailspin.

The figure was 9 percent below the same period last year and 24 percent down on the preceding quarter.

Companies that have pulled large office moves in London over euro zone concerns include law firm CMS Cameron McKenna and wealth manager Schroders, which was poised to move into an empty block next to the Bank of England before a u-turn in December.

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