German prime office prices slide 1.2% in 1Q09 - Jones Lang LaSalle's VICTOR

German prime office values fell by 1.2% in the first quarter compared to 4Q08, according to the VICTOR valuation indicator of realtor-consultant Jones Lang LaSalle. This brought average prices down by 17.8% compared to their peak in mid-2007. Launched earlier this year, VICTOR's second reading for the five major cities in Germany thus showed that the decline slowed in the first three 2009 months. Andrew Groom, head of valuation for Jones Lang LaSalle Deutschland, said: "After the shock of the fourth quarter last year, the downtrend in the top market segments has made what we believe is a temporary pause. However, the lowered intensity of the valuation fall allows no clear conclusions to be drawn that a sustainable bottom might be forming yet. Certain delay mechanisms exist because of the rigid nature of the adjustment mechanisms in the leasing market, and their impact is going to be first seen in the next few quarters." He said it remains to be seen if a significant change takes place in the parameters in the rental market, considering all the economic factors at play. In the investment segment, initial capital yields stabilised in first quarter, at least temporarily. Rental levels for top office space across the Big 5 held fairly unchanged despite the negative economic environment. Only a marginal climb in vacancy rates was in evidence across an almost unchanged structure of space availability in 1A office locations, but incentives rose.

(For full story, log in to download 119 Property Investor Europe, published 4 May 2009)