Pan-European IPD Index shows modest capital depreciation,

European commercial property delivered a much improved euro-denominated total return of 3.7% last year, according to the IPD Pan-European Annual Property Index compared to -11.4% in 2008. Stripping out the modest currency adjustments of the year left the 2009 return still just in positive territory, at 1.4% (-4.4% in 2008).

The headline euro return reflected a -2.0% capital depreciation offset by a solid 5.9% income return. But the positive return masked deterioration, compared to 2008, in nine out of the 16 markets measured by IPD which contribute to the headline total return.

From best to worst, the scale of euro-based capital depreciation was shallower last year (between -28.9% and 16.1%) than in 2008 (between -43.9% and 13.2%). Ireland still suffered the steepest re-pricing for the second consecutive year, at -28.9%, while Norway bounced back from -26.4% in 2008 to an impressive 16.1% capital growth in 2009.

The strongest trend reversal was in the UK: a euro capital return of -43.9% in 2008 was flipped to +4.9% last year - partly due to a reversal of the currency effects in favour of sterling. Sweden was the third notable European market which saw a recovery in annual capital return from -20.8 in 2008, to 3.2% last year.

The index results were delivered at the first in a new series of IPD hosted webinars, broadcast live from IPD’s London headquarters. Chaired by co-founding director Ian Cullen, the panellists comprised BNP Paribas Real Estate’s Keith Steventon, CB Richard Ellis’ Michael Haddock and Jones Lang LaSalle’s Nigel Roberts.

When asked whether he anticipated the shift back to positive total returns as early as 2009, Keith Steventon said: 'I admit I was slightly surprised as the numbers came in more optimistic than I thought they would; especially since we didn’t think the German and French markets were performing well enough to drive an overall positive return.'

Ian Cullen, co-founding Director of IPD, said: 'These results suggest a degree of stabilisation amongst European returns, with the market-by-market performance spread dropping for the first time in 8 years, and almost halving as compared with the Pan-European low point in 2008.'