Change of property value reflects Eurozone crises

European investment volumes fell slightly in Q2 from Q1, but were resilient in the Nordic region, France and CEE; and it were these areas which saw the strongest capital growth in the quarter. According to the latest European Valuation Monitor (EVM) published by CB Richard Ellis CEE lead the way (with nearly 1%), the Netherlands was the worst performer (-3.6%). Southern Europe & Ireland also fell as growth in Spain and Italy ebbed away. Over recent quarters the retail sector has seen the strongest performance, and this trend continued – retail property was the only sector to see positive value change (+0.8%) in Q2, adding to a year on year rise of 3.5%. While year on year change is still positive for the office sector (+2.0%), values fell QonQ by 0.2%, values in the industrial sector are now falling year on year (- 0.9% or -0.6 QonQ).

Andrew Barber, Senior Director of EMEA Valuation and Advisory Services, CB Richard Ellis, said: “Values remained almost unchanged across Europe over the second quarter of 2011. The absence of any strong general movement in either rents or yields last quarter, and economic uncertainty of Greece and other peripheral economies, saw a divergence in property value performance across both sectors and regions. Values fell in Southern Europe and Ireland, but it was the Netherlands which saw the greatest decline – reflective of the widening value gap between prime and secondary assets that has emerged there. As more evidence becomes available there may be more weakening in the secondary/tertiary markets. However, it is notable that investors continue to compete strongly for core assets that have recently come to the market. Economic momentum remains very uneven and investor concerns persist, but a clearer pattern of change is emerging with the stronger economic areas such as the Nordic markets, UK and CEE still seeing positive value change.