The outlook for the real estate market in Spain looks better than that for Italy, according to Joe Valente, European head of research for real estate at JP Morgan Asset Management.

The outlook for the real estate market in Spain looks better than that for Italy, according to Joe Valente, European head of research for real estate at JP Morgan Asset Management.

'Spain looks much better than Italy. Even though both countries will continue to battle strong headwinds, rental and capital values look as though they have reached the floor in Spain. In Italy the downturn in values will run on for another year,' Valente said in his outlook for 2014. He noted, however, that neither country is likely to experience the sort of turnaround seen in Ireland over the past 12 months.

Valente described 2014 as 'the year of secondary markets'. Yield spreads between prime and secondary property assets will continue to narrow in the UK and Germany as the main open-ended funds return to acquisition mode. 'Secondary markets in France will lag and are likely to experience further falls in value in 2014,' he said.

He added that European markets will continue to move at very different speeds in 2014. 'The UK has led changes in pricing and liquidity and the immediate prospects are better in Germany than in France. Property in France looks more over-valued than in Germany which will put upward pressure on French yields and cause capital values to fall in all but prime markets in 2014.'