LONDON, Feb 4 (Reuters) - The British property market will outperform the euro zone both in 2009 and on a five-year view, with the retail sector showing better returns than offices, Aberdeen Property Investors forecast on Wednesday.
European property markets will start to catch up with steep declines seen in Britain where average commercial property values have fallen 36 percent since summer 2007, Aberdeen said.
"We expect UK property returns to outperform, followed by the Nordic region and the euro zone over the coming five years. Prospects for central Europe are poor due to a withdrawal of risk capital by foreign investors," it said in a research note.
Aberdeen predicted a 6 percent annual return from British office properties between 2009 and 2013, better than 4 percent in the euro zone and 2 percent in central and eastern Europe.
For retail it expected total returns of about 6.5 percent per year in Britain and about 3.5 percent in the euro zone.
Aberdeen said occupancy rates and rental values for office space across Europe would fall next year, with rents declining most sharply in Barcelona, Dublin, Frankfurt, London, Madrid, and Moscow.
Brussels, Lisbon and Vienna would experience more modest declines because those cities were less dependent on the financial sector, it said.
"The risk for emerging Europe is for a sharper and prolonged slowdown, due to its dependence on the troubled manufacturing industry and reliance upon foreign capital inflows to sustain growth," Aberdeen said. (Reporting by Catherine Bosley; editing by Dan Lalor)