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Investors should act now before regional markets become more expensive says DTZ

wantspacegotspace.co.uk - Investors should act now before regional markets become more expensive syas DTZ•    The UK Fair Value IndexTM (FVI) score fell slightly from 90 to 85 in Q3 2013. Nevertheless, the UK remains more attractive than Europe as a whole with 15 of the 20 markets covered being rated as Hot

•    By 2014, DTZ expect most UK markets covered by the FVI to become more expensive with the UK FVI to fall rapidly to 43 by Q3

•    As a result, the number of Hot markets is expected to fall from 15 to just one - Manchester retail, by Q3 2014. Conversely, Cold markets will increase to four, including, London West End retail, London Mid Town and City offices, and Heathrow industrial.

DTZ has published the latest UK all-property DTZ Fair Value Index TM results for Q3 2013.  The Index, which offers insight into the relative attractiveness of current pricing in the UK property markets, declined slightly in the third quarter of 2013 to 85, from 90 the previous quarter.  Nevertheless, the UK remains more attractive than Europe as a whole with 15 of the 20 markets covered being rated as Hot.

In this latest report, DTZ has for the first time produced a five year forecast of the UK FVI. This forecast identifies a significant decline in the relative attractiveness of UK markets. Looking forward to the year ahead, DTZ expects most UK markets covered by the FVI to become more expensive.

The UK FVI is forecast to fall rapidly to 43 by Q3 2014. This will be the lowest score for six years. Moreover, DTZ expect the UK index to continue falling and plateau to just 18 in the third quarter of 2015.  

Richard Yorke, Head of UK Research, comments: “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.”

Consequently, DTZ expect a significant change in the relative attractiveness of UK markets. The number of Hot markets is expected to fall from 15, as of Q3 2013, to just one - Manchester retail - by Q3 2014. Conversely, the number of Cold markets is set to rise from one to four - London West End retail, London Mid Town and City offices, and Heathrow industrial - over the same period.

Posted by The Editor (wantspacegotspace) on 5th December 2013

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