Cushman & Wakefield’s quarterly analysis of European office, retail and logistics markets has reached ‘fairly priced’ for the first time since 2009.
The UK, with one from 28 locations (Bristol offices), and France, with two from 10 (Paris and Marseilles logistics), has the fewest underpriced markets.
The Fair Value Index analyses European markets benchmarked against ‘fair value’ – an adequate compensation over a five-year hold period for the investor’s risk in purchasing prime assets.
In the latest analysis, 30 markets are rated as underpriced, 65 fairly priced and 27 as fully priced. According to C&W, logistics markets offer investors the greatest scope to find underpriced assets, accounting for 17 of the 30 underpriced markets.
The total number of underpriced markets fell between Q1 and Q2 as the spread between fair and forecast returns narrowed as property yield compression lowered the latter.
Overall, Moscow sits top of the underpriced European markets table in Q2, ranked first and second for its retail and office sectors respectively. Sofia (office), Dublin (logistics), and Barcelona (logistics) complete the top five.
The five most fully-priced markets in Europe are Istanbul (office), Geneva (office), Vienna (office), Milan (retail) and Rome (retail).
Across the 122 markets, Cushman & Wakefield ranked 53% of logistics sector markets as underpriced compared to 14% of office and 14% of retail markets.
Mark Unsworth, head of EMEA forecasting at C&W, said: “This latest research shows that as property yields continue to fall, property valuations at the prime end of the market are becoming stretched, which is consistent with the advanced stage of the property cycle.
“Despite this, there are still opportunities across Europe, particularly in the logistics sector which continues to be supported by the positive structural growth story surrounding ecommerce.”
13 August 2015
5 August 2015
23 August 2013