Despite a rise in property yields, increases in alternative asset yields led to a further deterioration in European property valuations in Q2. (See Chart 1.) While industrial and office valuations still look the most stretched, retail has now joined them as overvalued. Notably, this is the first time the retail sector has been in overvalued territory since Q1 2009. Although, with bond yields in most markets expected to end the year at or below their Q2 levels, valuations could be near their trough if property yields rise further.
Note: We’ll be discussing what a new UK prime minister could mean for the property market outlook in a Drop-In on Tuesday, 6th September. Register now.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services