Strong performance within European office markets over the course of the last five years has increased the competition for prime assets within European cities. The cities of London, Dublin and have experienced pronounced levels of investment activity in the period 2010-2015 however for investors chasing yield the focus has been very much centered on secondary assets or the acquisition of prime office assets within tier-two cities. An equally noteworthy trend within the European office market is the opportunities afforded by the divergence in real estate market cycles across different countries. Cities including Amsterdam, Athens, Lisbon and Madrid have all witnessed a marked increase in activity levels as investors seek to capitalize on cyclical trends within the office markets in tandem with the multi-paced economic recovery within cities and city regions.  

A diverse spectrum of analytical techniques are applied to the MSCI European City Office Index series including lead-lag correlation, co-integration and Granger Causality to measure alignment and responsiveness between European city real estate markets across the real estate cycle and to determine the windows of opportunity that exist for investors vis-à-vis the real estate cycle. Optimal portfolio analysis serves to demonstrate the considered ‘added-value’ of including ‘tier-two’ cities within the confines of a European office investment portfolio.