Comment from Dermot Charleson on European real estate values

The IPD Pan-European Property index released earlier this week saw Switzerland emerge top of the total returns table across Europe in 2012 at 6.8%. Sweden, France and Poland followed closely behind, with returns of 6.3% and above.

‘‘These markets saw better than average value growth driven by improving retail capital values, reflecting the continuing investor demand for diversified income offered by retail real estate.’’

Elsewhere improving residential markets helped bolster returns because of their perceived resilience compared to other sectors, with values increasing by 6.4% in the UK, 3.1% in France and 2.6% in Germany. However, declining industrial and office values continued to be drag on 2012 total returns in many markets.

‘’Offices and industrial values can often be more vulnerable to the difficult economic conditions we have seen across Europe, which helps to explain why IPD showed industrial capital value declines of -12.9% in Spain and -8.8% for Dutch offices.”