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IPD Indicators reveal positive news for European real estate investors

National markets within Europe on aggregate are recording positive capital growth for the first time since the middle of 2012, according to the results from IPD's Pan-European Quarterly Transaction Indicators for Q1 2014.

The index comprises nine major markets across Europe, linking sales prices of over 30,000 individual transactions representing USD350bn in value since 1998.  Over the past 12 months around 1,500 transactions with a value in excess of USD20bn were used to generate the latest numbers.
 
While performance across Europe was modest with capital growth at 1.4 per cent pa, 1.2 per cent pa and 2.0 per cent pa over one, three and five years respectively, some individual markets appear to be performing at a higher level than expected.
 
In the UK, the Quarterly Transaction Indicator reported 8.1 per cent annual capital growth, greater than 7.0 per cent on the UK appraisal index for the same period.
 
For some other markets, the news was less encouraging.  The Netherlands shed -5.7 per cent of value on the transaction side, worse than the -4.6 per cent capital decline based purely on valuations.
 
“There is some evidence that transaction indexes can signal turning points in the market ahead of valuation based indexes,” says Mark Clacy-Jones, vice president and head of core research, IPD. “Caution must be exercised when using this data over short time horizons as small samples of transactions can cause an element of noise. However, IPD Transaction Indexes are a good measure of market volatility over longer time periods and it is in this risk context that they are most relevant.”
 
The IPD transaction linked datasets are used by the European Central Bank as a key input in the production of its quarterly commercial property price indicators across a number of major European markets. 


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