The French commercial sector deteriorated at a faster pace than in Greece, Italy or Spain in the last quarter of 2012, according to the latest RICS Global Commercial Property Survey.
The report on the fourth quarter of 2012 records falling occupier activity and negative expectations for rents and capital values across the region.
RICS found that risk appetite was improving in some markets but in general Europe's commercial real estate sector was still 'in pain'.
In the European occupier market, conditions were broadly unchanged compared to last quarter, with the majority of countries covered in the survey recording falling tenant demand and a negative outlook on rents. The best performing markets remain Germany and Russia.
Sentiment in the Russian real estate market remained firm with a material imbalance between the demand for, and supply of, prime space helping to underpin rental expectations. And Germany continued to buck the wider trend in Europe with both occupier and investment demand still on a rising path, although in both cases not by as much as a year ago.
According to the survey, a moderate Improvement in investor risk appetite in some European markets - such as Ireland, Germany, Russia, Scandinavia, Greece, Switzerland and Belgium - should lay the groundwork for an eventual recovery in the economy and commercial property sector over the medium term. But RICS warned that the coming year is likely to remain challenging.
The improvement was widely attributed to the European Central Bank's Outright Monetary Transaction (OMT) programme which effectively enables the ECB to act as lender of resort to eurozone governments.
Financial market conditions have improved markedly, including a significant compression in eurozone sovereign bond spreads. However, RICS said this had yet to feed through to the real economy, where private sector lending was still contracting at the headline level.
According to RICS, this partly explained why capital value expectations remained negative in the majority of cases. The split between those countries expecting rising and falling rents was unchanged on the quarter.