European property markets are fairly priced for the first time since 2009, according to Cushman & Wakefield’s Fair Value Index.
It found that 65 of the 122 European office, retail and logistics markets it analyses were fairly priced for investors, while 30 were underpriced and 27 were “fully priced”.
The index analyses markets based on their return over a five-year hold period, compared with the risks associated with buying those assets.
Logistics had the most opportunities for investors with 17 underpriced markets, compared with six in retail and seven in offices.
Geographically, the UK had the fewest underpriced markets at just one – Bristol offices – in 28. Istanbul offices was the most fully-priced market as a result of Turkish bond yields pushing the fair return for property to almost double the forecast return.
The report showed that Central and Eastern Europe had the highest number of underpriced markets, while Germany, Benelux and peripheral Eurozone markets had a “good balance” of fairly priced and underpriced markets.
Mark Unsworth, head of EMEA forecasting at Cushman & Wakefield, said: “This latest research shows that as property yields continue to fall, property valuations at the prime end of the market are becoming stretched, which is consistent with the advanced stage of the property cycle.
“Despite this, there are still opportunities across Europe, particularly in the logistics sector, which continues to be supported by the positive structural growth story surrounding e-commerce.
“From a geographical perspective, markets in Central and Eastern Europe, Spain and Germany offer the most attractive investment opportunities driven by a combination of healthy economic prospects and continued investor demand.”
