We expect the euro-zone to fall back into recession in 2012 and 2013. We have therefore cut our commercial property forecasts to reflect the weaker economic backdrop. Over the next two years, we expect most markets to experience some renewed falls in capital values as property yields mark time, or drift a little higher and rental values drop. With returns highly dependent on income, industrial property will tend to outperform. At the country level, we think the prospects for Germany, Austria and the Netherlands are the brightest.
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