The latest Cushman & Wakefield analysis of 123 European property markets has continued its downward trend in Q4 2017 to reach a level last recorded in Q1 2006.
The agent's quarterly European Fair Value Index measures fair value as the adequate compensation over a five-year hold period for an investor’s risk when purchasing prime property assets.
In Q4 2017, just 19% of the index was classified as ‘underpriced’, reflecting both the advanced stage of the property cycle and the availability of fewer attractive prime opportunities.
Logistics remains the most attractive sector, with 39% of the markets classified as ‘underpriced’, and only two as ‘fully priced’.
Moscow remains top of the underpriced European markets table, ranked first and third for its retail and office sectors respectively. Budapest (retail) was second with Budapest (logistics) and Dublin (logistics) completing the top five.
Core office markets such as London, Paris and Munich are all classified as fully priced having reached their lowest historical yield, with limited yield compression forecast and, in many cases, modest rental growth expectations. CEE and Eurozone periphery regions continue to show a good balance of ‘fairly priced’ and ‘underpriced’ markets, while in contrast Germany, Benelux and the Nordics have only a few ‘underpriced’ markets.
Mark Unsworth, head of EMEA Forecasting at Cushman & Wakefield, said: 'The positive structural growth story surrounding e-commerce has increased the need for fast and efficient delivery direct to consumers, leading to a rapid rise in demand for urban logistics premises. This continues to underpin the attractiveness of the logistics sector.'
