The pace of decline in capital values accelerated in Q1 2009 with countries in both Western Europe and Emerging Europe hit by price falls, according to the Royal Institute of Chartered Surveyors’ (RICS) Global Property Survey.

France, the Netherlands and the Republic of Ireland saw capital values drop significantly with property professionals in these countries the most pessimistic regarding the near term price outlook (ranked in the bottom quartile of over 45 countries worldwide).

Respondents expect little easing in the pace of price declines in these markets although some moderation in price falls is expected in Spain and the UK. Germany remains the outperforming market in this part of Europe, with expectations towards property values less pessimistic than elsewhere.

Agents were increasingly pessimistic towards capital values in many parts of Central and Eastern Europe (CEE) which was the worst performing emerging market region. All respondents in Ukraine, Russia, Poland and Croatia reported a fall rather than a rise in capital values with confidence towards the outlook for lettings activity falling back further across the region despite recent G20 announcements.

Rents are falling across more than 90% of the countries surveyed. Weaker tenant demand has led to faster rises in reported available space which has compounded the gloom towards the rental outlook. Rental expectations are weakest in Ireland with sentiment in countries in emerging Europe also gloomy - particularly Hungary, Romania and Ukraine. Available space has risen across every region forcing agents to offer increasingly larger incentive packages in order to secure a letting.