'From a European perspective, in the short-term we expect investors to consider real estate to be a relatively stable place to invest and in the long-term it will be seen as a springboard for renewed hope and future financial growth,' Blundell said.

However, the economic slowdown will affect property sectors in different ways, and LaSalle forecasts that retail, residential and warehousing/logistics across Europe will suffer less than offices. Office take-up has already been hit by reduced demand from the TMT (technology, media and telecommunications) sector. But the investment manager notes that Grade A office rents have continued to rise in cities such as Dublin, Frankfurt, Madrid, Milan, Munich and Paris.

LaSalle Investment Management's 'Market Watch 3Q 2001' report also highlights five longer term trends that will drive European real estate in the coming years. First, the completion of the introduction of the euro will lead to greater convergence between European markets. With increased economic similarities, values and yields will converge.