Amsterdam and Berlin are experiencing an increase in attention, ahead of Frankfurt, Paris and Dublin, as investors try to spot which cities will benefit most from the UK leaving the European Union.
“Amsterdam is definitely very high up on investors’ hit list right now,” said Mike Bowden, partner in Knight Frank’s European capital markets team.
Bowden said the city is coming off a low base in its rental cycle, meaning rental costs are growing but still a fraction of other European cities. However, space is in short supply owing to Dutch rules that require schemes to be 60% prelet before they can be built.
“We have seen rapid yield compression, but on a capital value per sq m basis, Amsterdam is very attractive compared to the other peer cities like London and Paris,” Bowden said.
He said 65% of office transactions in the past 12 months in Europe have been in only four countries, with Paris, Amsterdam, Dublin and Madrid taking a lot of attention, but so too Berlin.
“We are now seeing leases being signed with zero rent-free, each deal signed at a slightly higher rent… there is a limited supply, there is a huge industry within Berlin… I don’t see that rental cycle slowing any time soon.”