The economies in central and eastern Europe have seen major property development, and some of the big economies in western Europe such as Germany, France and the UK have also been buoyant. While much activity has been focused on capital cities, the secondary and tertiary cities are also getting a slice of the property action.
Spiralling rents in Europe are not so hot, however, for business’s bottom line. The CB Richard Ellis Global 50 Index shows that half of the top 10 most expensive office markets in the world are in Europe, and two-thirds of the Global 50 most expensive are in European cities. The top 10 office markets now have occupation costs of over $100 per square foot per year.
Reading about the European property market these days, it seems to be all about investment, investment, investment. Property is becoming a global asset class and money is pouring into bigger and bigger deals. However, in its rush to make the big bucks, perhaps the property industry is forgetting something important. As we move into more turbulent economic times, giving the occupier a shake-up is a risky strategy. Without meeting demand requirements there will be no reward for the property investor.
Europe’s property market needs to concentrate more on the needs of the businesses and help them get better value out of their high rents; assist them in improving their green credentials; and give them more flexibility of tenure. Let’s hear more about how the occupier is benefiting from innovation in the market and less about the fat returns being sought.
Douglas Clark is director of Tenon techlocate, a site search and location marketing consultancy which is part of the Tenon Group PLC, a top 10 firm of accountants and business advisers.