European real estate has become slightly more attractive to investors as they move up the risk curve, DTZ’s European Fair Value Index for the second quarter of 2014 shows.
European real estate has become slightly more attractive to investors as they move up the risk curve, DTZ’s European Fair Value Index for the second quarter of 2014 shows.
The index rose to 76 in Q2 from 74 in Q1 (a score of 100 indicates that all markets are underpriced for investors and zero that all markets are overpriced)
Required returns are falling while the DTZ risk multiplier, a gauge of property market risk, is now close to its record low before the crisis.
The industrial sector is the most attractive from an investment perspective, with an index score of 93. The office sector has the lowest index score at 64, while retail stands at 78.
Peripheral markets in Ireland, Spain and Italy, along with CEE and Baltic markets, are the ‘hottest’ locations and are expected to outperform traditional core western European markets.
By contrast, Geneva offices and London West End retail are the ‘coldest’, most overpriced markets. Weak return and higher yield expectations for these markets are forecast to result in capital value declines.
