Vacancy levels across Europe have been climbing to more long term sustainable levels from previous lows. A few markets, such as Dublin, have experienced a higher than average increase in vacancy over the past year. Some main markets such as Munich, Milan and Paris still have low overall vacancy.
Knight Frank projections for 2003 have been calculated on a two-fold basis: Firstly, on the best overall performing markets from an economic, socio-demographic and property perspective and secondly, on how markets will perform with respect to just rental growth. The first projection compares markets across twenty common variables within three main categories: economic data, socio-demographic profiles and property specific data. Each variable has been weighted and the results from individual markets have then been compared against other market output. While these key variables remain consistent on a continental scale, regional factors varied depending on data availability by continent. Thus, the scoring results are based on different totals and cannot be compared on a cross- continental basis. The results suggest that 2003 will be a year of mixed opportunity.
Key prime markets such as Milan, Paris, Amsterdam and London will remain important investment destinations in 2003. However, the focus will remain positioned on smaller and secondary European markets and the potential opportunity gained from investing in them. This is a trend that emerged during the second half of 2002 and is expected to continue into 2003. Smaller markets such as Glasgow, Edinburgh, Leeds and Manchester will offer an attractive combination of economic safety, positive property investment fundamentals and market confidence, which investors continue to seek. Knight Frank believes the strongest 15 office markets for 2003 are Milan, Glasgow, Edinburgh, Leeds, Paris, Manchester, Birmingham, Amsterdam, Cardiff, Dublin, London, Newcastle, Sheffield, Lisbon, Madrid and Frankfurt.