Luxembourg and Sydney have displaced the previous front-runners London and New York from ranks one and two of the most attractive locations for property investors. This emerges from the latest property location scoring compiled by DEGI Research, where the analysts have updated the data from the international property report Global Values published in September 2005 and included some new locations as well.
Luxembourg makes its debut in the scoring, and lands first place straight away. Hong Kong, Zagreb and Istanbul are also appearing for the first time. This means were getting a whole lot closer to our goal of a structured, globalised property market analysis, is how Dr. Thomas Beyerle, Head of Research & Strategy at DEGI, explains the thinking behind this new analytical procedure in the property sector. The scoring scheme rates the attractiveness of locations using an array of variables relating to the situational conditions they offer property investors in terms of the macro-economic business environment and the property market involved. It incorporates not only macro-economic structural data but also key data on the markets dynamics. The property-business parameters of market liquidity, market transparency and market volatility account for 50 per cent of the total score.
Moscow with top returns
The better a location performs in the scoring, the lower the investment risk at the locations involved will be, thanks to the favourable overall conditions. A low risk, however, will be rewarded by only moderate returns. "In times where returns for office properties are tending to converge, the results from the scoring procedure provide us with vital structural pointers on the sustainability of property investments. The global property markets continue to offer potentials for diversification, and each investment style will also find adequate investment markets to suit it, explains Beyerle. Above-average returns were achieved here almost solely by locations with a definite risk profile, ones that did not place all that high in the scoring. Moscow is by some distance the front-runner for returns in the period from 1998 to 2006, followed by the Baltic locations and Zagreb.