In its latest European research report, Savills highlights that net effective rents across the 21* countries surveyed have grown on average by 5.1% year on year in Q1 2014, whilst headline rents have grown by 2.9% on average in the same period.

Julia Maurer, European research analyst, explains: “There is a much better outlook for most of the European office markets and greater confidence from landlords. This has contributed to a reduction of rental incentives being offered which has contributed to net effective rental growth."

Savills reports that Dublin, The City of London and Paris have seen the strongest year on year net effective rental growth in Q1 2014, at 39%, 175% and 11% respectively. 

According to Savills, incentives have reduced in all markets where prime office supply is constrained or the markets are picking up from the aftermath of the financial downturn and landlords have been able to minimise discounts. On average, rental discount in the markets surveyed is now at 10.3% compared to 12.3 % in H1 2013. The greatest reduction of incentives has been recorded in Dublin, Hamburg, Amsterdam and The City of London. Milan, alternatively still provides the greatest discount on rents, followed by Paris La Defense. Athens, the German cities, Belgrade and Oslo all providing the lowest discount on rents.

Julia continues: “The surge of take up seen in the City of London and Dublin helped those markets to decrease incentives offered, whilst the German markets have proved stable throughout the whole of the financial crisis, with incentives never exceeding 10%. We predict that as the economic recovery continues to spread across Europe we will see incentives decrease further which will help to create net effective rental growth.”

*The markets surveyed for this report include Amsterdam, Athens, Berlin, Belgrade, Brussels, Dublin, Dusseldorf, Frankfurt, Hamburg, London City, London West End, London Thames Valley, Madrid, Milan, Munich, Oslo, Paris CBD, Paris La Defense, Stockholm, Vienna, Warsaw.