The UK property market remains more attractive than Europe as a whole, but this is expected to change due to falling yields and lower expected returns, according to DTZ.
The UK property market remains more attractive than Europe as a whole, but this is expected to change due to falling yields and lower expected returns, according to DTZ.
The adviser’s latest Fair Value Index results for the UK show a slight decline to a score of 85 from 90 in the previous quarter.
However, the UK remains more attractive than Europe as a whole with 15 of the 20 markets covered being rated as Hot.
In its latest report, DTZ has for the first time produced a five-year forecast of the UK Fair Value Index which reveals a significant decline in the relative attractiveness of UK markets. Looking forward to the year ahead, DTZ expects most UK markets covered by index to become more expensive.
The index is forecast to fall rapidly to 43 by Q3 2014, the lowest score in the past six years.
Richard Yorke, head of UK research, commented: ‘The rapid fall in the UK Fair Value Index will be due to a combination of yield compression, lower expected returns as regional markets become less under-valued, and higher required returns caused by rising bond yields.’
He added: ‘Given our expectation of the Fair Value Index falling sharply from next year, investors should consider acting now in order to maximise potential returns.’
