Real estate investors in the Eurozone should be demanding higher risk premiums (buying at below market value) to reflect the likelihood that individual countries will exit the currency bloc due to the sovereign debt crisis, according to a new report from investment bank Natixis and its property affiliate AEW Europe.

The report was unveiled at a seminar during the Expo Real trade fair in Munich and indicates that a ‘two Euro’ system may emerge.

‘The sovereign debt crisis in the Eurozone has driven up banking risk and corporate risk, creating an environment characterized by high risk aversion, abundant liquidity and sluggish growth in the OECD countries,’ Patrick Artus, global chief economist at Natixis, reportedly said.

‘We believe, however, that at the brink of the precipice the European Union will muster sufficient financial firepower and political will to refinance the banking system, allow an orderly default of Greek debt and prevent the break-up of the Eurozone,’ he explained.

According to Natixis, property prices within the Eurozone isn’t yet reflecting the possibility that the contagion of the crisis won’t be stopped and that a two euro system may emerge, with a core bloc centred around Germany, and sharply devalued currencies in the periphery countries that are forced to exit the Euro.