But Gerald Blundell, Head of Investment Strategy at LaSalle Investment Management Property in Europe warned that Europe is not immune to the effects of the global slowdown. 'Investor expectations for 2002 are very different from those of 12 months ago,' he said. 'While we may not see the stellar returns we saw in 2001, we expect property to continue to perform as advertised, with much greater price stability than equities and yields higher than bonds.'

LIM recommends investors should approach Europe as three separate markets: the Euro Zone, the UK and Central and Eastern Europe. In the Euro-zone, cross-border investment will rise as investors resident within the Euro-zone start to exploit their expanded "home market". In the UK, values could rise quickly once an economic recovery gathers momentum. And in Central and Eastern Europe the cities with the least amount of risk and the best prospects will be those geographically closest to Western Europe such as Budapest, Prague, and Warsaw.