Prices of office, retail and industrial properties in Amsterdam along with Chicago, Tokyo and Washington DC have not fully recovered in the decade since the global financial crisis, according to new evidence from data and research provider Real Capital Analytics (RCA).
RCA has created a series of market indices which show that commercial property prices in the four cities still lag well behind gains made by other major cities where a combination of competition for properties and low interest rates have driven pricing to record levels. RCA’s new commercial property price indices (CPPI) reveal that in the second quarter of 2017 the Global Cities Composite, comprising 27 of the most important investment markets, was 36.1%, which is ahead of levels a decade ago, before the global financial crisis.
But the four cities have not regained their prior peaks in 2007 shortly before credit markets froze, triggering property price falls, RCA said. Pricing in other cities has fully recovered and has even set new records with Hong Kong prices tripling since the peak of 2007 and those in London’s West End nearly doubling.
‘Investors have favoured core, city centre properties in the most globally connected markets,’ said RCA’s president and founder, Robert White. Local economic challenges and oversupply explain why the four cities have not followed the general trends.
However, Amsterdam and Chicago have started to gain momentum as price appreciation calms elsewhere – London’s West End has underperformed in relative terms recently. The Global Cities Composite of RCA CPPI rose 8.3% in the second quarter of 2017 from a year earlier, led by strong gains in Boston, Hong Kong, Melbourne and German A cities – Berlin, Cologne, Dresden, Düsseldorf, Hamburg, Munich and Stuttgart. But in London’s West End, price gains were 0.2% over the year and deal volumes fell 17% to $7.8 bn (€6.6 bn).
The RCA Global Cities Indices are a subset of a full complement of more than 350 indices produced and published by RCA.
