CBRE launches new measure of value trends in Europe

CB Richard Ellis (CBRE) has launched a new measure of value trends in the European property market. The global broker said the European Valuation Monitor (EVM) provides investors with a regular guide to changes in capital values, based on regular fund valuations in order to give a quick snapshot of market value trends. With results also published in a new quarterly report, the EVM has been designed to enhance transparency and provide a quick general indication of patterns of value change in the European property market.

The EVM provides a single-valuer view of capital value movements based on a sample of institutionally-held standing investments, and aims to complement existing indicators. The new quarterly report will provide the market with a frequent and timely addition to assist with the understanding of trends in the European commercial real estate market, CBRE said.

Andrew Barber, senior director of International Investment Valuation at CB Richard Ellis, said: 'We have created the EVM in response to feedback from investment clients on their need for a more regular guide to how capital values were changing, allowing them to benchmark value movements in their own funds against the wider market. By using the EVM, companies will be in a better position to communicate to their investors on their own fund performance relative to the market and their fund peer group.'

The EVM report shows that after seven consecutive quarters of decline, values across the European property market grew 0.6% in Q4 2009, and have shown a further increase of 0.4% in Q1 2010. Year-on-year, however, values are still 4.3% lower and 19.7% below the level of Q4 2007 The levelling-off in capital values has been driven by investor appetite for prime properties, with a particularly marked rebound in investor appetite for UK assets from the second half of 2009 driving a year-on-year change of 10.1%. Excluding the UK, capital values continued to fall in Europe, albeit with the pace slowing further to -0.5% in Q1 2010 from -1.1% in Q4 2009.

While France is only the second region after the UK to record a capital value increase in this cycle (0.4% Q1), the uncertainty that began to emerge about Europe’s fiscal problems has led to a decline in investor confidence in the Southern Europe and Ireland region. Value falls accelerated to 1.6% in Q1 from 0.5% in Q4. Offices continued to show the largest falls in capital value outside the UK. However, the strong performance of West End and City offices in the UK meant that industrial was marginally the weakest sector overall, with retail continuing to lead the recovery on a pan-Europe basis, paring its decline from Q4 2007 to -19.4%.