European prime office yields moved out by an average of 5 basis points to 4.90 percent during first quarter 2024, down from a 17 basis-points increase in the previous quarter, as yields begins to stabilize, according to Savills.
Copenhagen (+25 basis points), Manchester (+25 basis points), Barcelona (+15 basis points), Milan (+15 basis points), Madrid (+15 basis points), Berlin (+10 basis points), Cologne (+10 basis points) and Hamburg (+10 basis points) all saw yields softening during the quarter, contributing to European prime office yields moving out by an average of 155 basis points in the two years since first quarter 2022, indicating an average yield impact on capital values of -31 percent.
The international real estate advisor said that Madrid offices now appear under-priced, with their yields at the end of first quarter sitting at 4.90 percent, given the relatively higher sovereign bond yields pre-2022, and their resilient rental growth prospects. The core mark
