A rise in the number of attractive real estate investment opportunities was recorded in the final quarter of 2011, with prime assets continuing to offer the best returns. This is the finding of the DTZ Fair Value Index Europe report for the final three months of last year, which noted 61 out of the 98 markets surveyed are rated either hot or warm, indicating investors can expect modest returns on their money in these locations.
Capital values in the majority of markets are not expected to grow significantly in 2012, which is why only nine destinations have been labelled as hot. However, the study stated "prime property is providing investors with a relatively attractive proposition within the current economic environment". Associate director of forecasting and strategy at DTZ Ben Burston commented: "With German office markets trading at a yield of around five per cent, and most regional UK office markets at six per cent or more, investors can earn adequate returns even in the absence of future capital appreciation."
In the firm's UK Fair Value Index, only one of the 20 sectors surveyed by the firm is rated as cold, with many asset classes upgraded in the fourth quarter of 2011, compared to the previous three-month period. Manchester industrial was bumped up from warm to hot, while the Bristol, Edinburgh and Cardiff office markets all climbed from cold to warm in the same period. Commercial real estate in London, meanwhile, is listed as warm due to rental growth expectations, with a "solid rental uplift" anticipated in the medium term.
DTZ pointed out there are some European markets where significant returns are available on commercial property investments, although they represent a higher risk. Dublin was cited as one example, with the Irish city being upgraded from cold to warm and the organisation asserting there is "strong potential for a bounce back in values over the medium term", adding that investors who get into the market now will be able to take full advantage of this uplift.
- Monday 05 March 2012