DTZ EuroInvest Director John Rigg said: 'The broad pattern of constrained development activity over recent years should help to cushion the real estate sector from any adverse effects arising from slowing demand. For the foreseeable future, property markets should generally remain far less exposed than was the case in the last cycle. Indeed the property sector appears to be a relatively safe haven in an overall investment context of increased volatility.'

In the occupational market, markets such as Paris, Madrid and the West End of London saw record demand and exceptionally strong rental growth. With comparatively low levels of development activity, and a strong element of pre-leasing, DTZ is forecasting that the current supply/demand imbalance is generally likely to remain for the foreseeable future.

The retail sector remains the one area of concern for European investors. DTZ reports Prime high street and shopping centre rents remained healthy although there is continuing polarisation between prime and secondary locations.