European markets less attractive for global investors: DTZ

European property markets have become less attractive than other global markets in the past year due to strong yield compression and increased risk premiums in some markets combined with a sluggish rental growth outlook. That is one of the key findings of the European all-property DTZ Fair Value Index launched last week in Frankfurt.

According to the index, the UK is the least attractive market at present with proportionally more cold markets than hot meaning that many are now over-priced. The same applies to the Nordics. Germany is currently the most attractive market in Europe with no markets classed as overpriced. France has no markets classified as hot, but a significant proportion classed as warm, indicating that most markets are well priced.

'We have devised the DTZ Fair Value Index to help investors to allocate funds to commercial property, particularly in this highly uncertain market environment,' according to Hans Vrensen, Global Head of Research. Vrensen claims the Fair Value Index is the first ever forward-looking commercial property value index offering investors insight into the relative attractiveness of current pricing in prime office, retail and industrial property markets across Europe, Asia Pacific and the US.

'The indices take into account macro-economic factors such as the European sovereign debt crisis. The index quantifies the impact of these trends on the attractiveness of individual markets over a five-year investment period - providing investors with our foresight.'

Last week, DTZ also launched a Fair Value index for the UK market. DTZ's new index offering consists of a suite of 17 different Fair Value Indices that will provide investors with a comprehensive assessment of relative value across the world's commercial property markets by region and property type. Each index will be updated quarterly on the back of DTZ Research's property market forecasts. The indices are based on a quantified assessment of whether pricing in 180 individual markets is attractive to investors, and signal to investors which regions and sectors offer the best value.