The recovery in capital values seen in most euro-zone property markets over the past year or so, looks set to be reversed in 2012. As the economy slides back into a deep recession, occupier demand will contract and rental values will fall. The recession is also likely to reverse the downward trend in property yields, compounding the downward pressure on capital values. The scope for capital values to fall generally seems largest in the weaker peripheral economies. But property in France seems expensive. Thus, unlike other core economies such as Germany and the Netherlands, property in France will underperform.