Investment performance across Europe's property markets is expected to polarise further rather than converge in 2011, according to Joe Valente, the Europe head of research and strategy at JP Morgan Asset Management's real estate arm.

'Whilst returns have been positive across Europe leading some to suggest that we are likely to see increased convergence in 2011, this is an illusion,' Valente said. He expects investment performance in 2011 to continue to improve overall but the nature of that performance will be radically different going forward.

Valente: 'As the driver of growth moves from a capital market story and yield compression towards the leasing market, performance will polarise further. Very simply yields are global, rent is local, a function of local variations in supply/demand and it is this which will drive performance during the coming year.'

Commenting on investors' ongoing focus on core, Valente said pricing for these assets is becoming even more competitive. However, he does not expect 'a great rush out of core'. 'While some investors will inevitably be tempted to move up the risk spectrum, such a decision should be based on the attractions of those markets rather than the lack of product at the core end of the market.'