Opportunities to find value in prime European property have fallen to levels similar to 2006, when the overheating market headed toward a major correction, according to figures in Cushman & Wakefield’s latest European Fair Value Index.
The index, which assesses “adequate compensation” over a five-year hold period in 123 European office, retail and logistics markets, showed just 19% of the index was “underpriced” in Q4 2017.
It was the first quarter without a single underpriced market in the UK.
Two-thirds of the UK was “fairly priced” and a third was “fully priced”, which means there is little opportunity to find assets with growth potential.
However, there were 20 fully priced UK markets through most of 2006-2007, compared to seven at the end of 2017, which suggests the situation is still considerably more stable than it was then.
Fully priced markets do not necessarily mean there is no value available, Cushman & Wakefield said, but that the opportunities that do exist will require more expertise to unlock.
Logistics remained the most attractive sector across Europe, with 39% of the markets classified as underpriced and just two – London Heathrow and Oslo – as fully priced.
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