But it is the office sector that has been hit hardest. In a survey of 49 office locations some 26 saw prime rents fall, 23 were unchanged with none experiencing an increase, the latest index from CB Richard Ellis shows.
The steepest fall was in Kiev, down 25%, followed by Moscow which saw rents decline 16%. Several other Central and Eastern European markets also saw downward pressure.
Among the major western European office markets, notable quarterly falls occurred in London, Madrid, Dublin and Oslo, while rents remained relatively stable in Germany and the Netherlands.
Rent movements in other sectors were more muted. The retail rent index was effectively static and has seen very little change over the past year, the property consultants said. But 14 of the 42 individual locations saw some downward movement in the second quarter, most notably the UK, Budapest, Bucharest and Belgrade. Frankfurt was the only market which saw an increase in retail rents.
The industrial rent index fell by 1.5% in the quarter and is now down by 5.3% for the past year. This disguises the fact that 25 of the 41 locations in the survey saw no change in the level of prime rent. Among the 16 locations that saw a decline, Romania, Spain, Belgium and Ireland saw notable falls, with Budapest recording the largest individual fall at 16%.
'The downturn in real estate values across Europe has so far been predominantly driven by increases in yields. However, we have now clearly entered a period in which rents are the driving force behind the property value corrections,' said Richard Holberton, Director, EMEA Research, CBRE.
'This quarter's European yield data is particularly interesting. It is too early to signal the end of the period of rising yields, but equally the scale and incidence of yield increases are now a lot more patchy than they have been for awhile. While investment turnover remains relatively low, there appears to be growing interest in several areas of the market, supported by the repricing that has already taken place,' he added.
Indeed the index shows that having seen near-universal increases over the past year, yield shifts in the second quarter were more mixed across Europe, with the industrial and retail yield indices seeing increases of no more than 10 basis points and the office yield index effectively unchanged.
