European real estate stocks have dropped sharply over the summer on the back of mounting fears over a double dip recession. The unfolding of the eurozone's debt crisis, coupled with prospects for slower economic growth, has sent shockwaves through the listed sector, prompting a nearly 16% share price drop throughout the industry in the first three weeks of August alone, data from Global Property Research shows.

European real estate stocks have dropped sharply over the summer on the back of mounting fears over a double dip recession. The unfolding of the eurozone's debt crisis, coupled with prospects for slower economic growth, has sent shockwaves through the listed sector, prompting a nearly 16% share price drop throughout the industry in the first three weeks of August alone, data from Global Property Research shows.

The declines - totalling an average of 21% since June - come after a promising start of the year, which saw listed firms embark on a recovery path across Europe. The GPR Europe Index, which focuses on 56 quoted property companies, posted returns of 3.6% and 3.4% in April and May respectively, before sliding back into negative territory from June onwards. 'The stock performance is, in our opinion, increasingly driven by macroeconomic issues rather than by fundamentals,' noted Frank Neumann, an analyst at German lender Bankhaus Lampe. 'Financing issues in particular have begun to move back into focus for some companies.'

As such, Northern European and Swiss stocks are showing more resilience than their southern counterparts, where concerns over state indebtedness continue to pressure values. The usual suspects in terms of weak performers included Spain's Metrovacesa (-48%) and Inmobiliaria Colonial (-24%) as well as Italy's Prelios (-32%) and Beni Stabili (-24.5%). Nevertheless, Germany's IVG Immobilien was among the worst performing stocks in August, plunging nearly 40% in August after posting a EUR 68.8 mln loss in Q2, versus a EUR 18 mln profit the year before. Shares in Prime Office REIT and DIC Asset shed 22% and 17% respectively, dragged down by new data pointing to stagnant economic growth prospects.

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