AllanSaundersonis managing editor of Property Finance Europe and acontributor to

LONDON-Rents and development activity in many locations inEurope will continue to decline over the next six months, whilevacancies will rise as the economy recovers only gradually despitethe improvement in European economic sentiment, says internationalrealtor Savills.

Prime CBD rents dropped 10.5% across Europe in third quarter,leading Savills to predict average annual CBD office rental growthfor 2009 falling by around 11.0%. At the same time, average rentsfor 70% of 33 cities surveyed by Savills will fall over the next 6months, while only 25% will remain stable. In development, demandwill drop over the next six months, boosting supply by 65%. Averagerates currently stand at 10%, 35% higher than in the first half of'08, and these are set to rise further in most locations.

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