Commercial property in Europe has reached its best value in over ten years, according to a study by DTZ.
The DTZ Fair Value Index looks at the ‘attractiveness’ of pricing in European commercial property every three months, by grading each country with a score out of 100. In DTZ’s new index for the final quarter of 2012, the European average had risen from 62 to 78. This is the highest overall score given in Europe since September 2003.
Magali Marton, head of CEMEA Research at DTZ, said: "The most significant factor behind this change has been the more positive outlook for the Eurozone, which has pushed down bond yields and required returns as the risk of break up has receded. The upshot is that property looks better value in comparison to bonds."
Under a ‘hot, warm, cold’ ranking, the report further highlighted that 94 out of the 105 markets covered had been ranked either ‘hot’ or ‘warm’.
Out of the European countries, six countries managed to record the highest score possible of 100. These were the Baltics, the Netherlands, Denmark, Belgium, Norway and Finland. These were then followed closely by UK, Ireland and Germany who achieved a score of 91. The CEE markets of Italy and France then followed in third, but with a much lower score of 72. The country which fared the worst was Spain, which managed just 17 and will naturally not be attractive to investors.
It was Germany that saw the biggest improvement, rising from 73 in the previous quarter, but the UK also fared well, with 17 of its 20 markets now being classified as ‘hot’.
Analysts hope that these upward trends will continue for the rest of 2013, in order to help improve the current Eurozone crisis.