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DTZ Foresight

China Fair Value : Property more attractive as required return falls - Q2 2014

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China Fair Value : Property more attractive as required return falls - Q2 2014

The DTZ China Fair Value IndexTM score rose to 53 in Q2 2014, up from 39 in the previous quarter, and meaning that property has become more attractive to investors (a score of 100 indicates that all markets are underpriced for investors and zero that all markets are overpriced).

Investors are becoming less risk-averse and more willing to move up the risk curve. Required returns are falling while our DTZ risk multiplier, which gauges the riskiness of property investment, fell for the eleventh quarter in a row, leaving the property risk premium is now back around pre-crisis levels.

The rise in the China Fair Value score in Q2 was mainly driven by an improvement in tier I cities, where sound fundamentals combined with a lower hurdle rate to overcome has made property more attractive to investors. Conversely, tier II cities generally remain unattractive as weak fundamentals continue to weigh on property returns.

Source : DTZ (Groupe UGL)

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Keywords : DTZ