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London's office real estate market to see rapid growth

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Staff writer ▼ | December 17, 2015
London's office real estate market will see rapid growth over the next 12-18 months, while the Paris market will remain subdued as a result of ongoing sluggish macroeconomic growth, according to Moody's.
London real estate
Offices   The Paris market will remain subdued
The ratings agency said UK GDP growth has been much stronger than France's in recent years, although the gap is expected to narrow in the longer term.

While the UK experienced a steeper contraction of GDP during the financial crisis in 2009, it has recovered strongly since 2012, whereas France's GDP growth continues to lag, Moody's observed.

Similarly, the unemployment rate in France was persistently higher through the financial crisis and shows no signs of abating, while the unemployment rate in the UK has been trending down since 2013.

The agency notes that prime rents are growing in London, recording a 5.8% increase between 2010 and June 2015 in the West End, compared with a decline of 2.8% in Paris CBD.

There is also a disparity in direct real estate investment between London and Paris, with investment in London far outpacing that in Paris, where less favourable rental growth, combined with lacklustre economic growth lessens the incentives for new investment.