Emma Giamartino
Chief Financial Officer at CBRE Group
Thanks, Bob. On a consolidated basis, growth of our resilient lines of business continued during the quarter. Together, these businesses, which consist of our entire Global Workplace Solutions business, Loan Servicing, Property Management, valuation and the asset management component of Investment Management saw net revenue rise 10% in constant currency. Please turn to slide six as I discuss our Advisory Services results. Weakness in capital markets had a pronounced effect on the advisory business. Advisory net revenue fell 21% against a challenging prior year comparison when net revenue grew by more than 20% versus Q2 2021.
Our capital markets businesses, property sales and loan origination together saw revenue fell 44% versus a 13% increase in the prior year second quarter. In the Americas, property sales revenue fell 49%, more than expected, reflecting limited credit availability and the gap between buyer and seller expectations. We are beginning to see an uptick in investor appetite for industrial assets where buyers will accept modest negative leverage due to the significant embedded rent gains over the past several years. In U.S. multifamily, CBRE currently has $18 billion of deals in the market, more than double our volumes sold in the first half of the year.
Sales revenue fell 43% in EMEA and 11% in APAC, both in local currency. We are increasingly well positioned in APAC. Notably, revenue in Japan has increased by 16% in local currency year-to-date, and this has become our most profitable advisory market outside the U.S. In contrast with capital markets, leasing performed in line with our expectations with revenue down 16% versus 40% growth in the prior year second quarter. The leasing decline was driven by the Americas. Leasing revenue grew in overseas markets as combined APAC and EMEA increased 6% in local currency. Among property types in the U.S., office was weakest with revenue down 30%, while industrial was down only 10% against the challenging prior year comparison.
Loan servicing revenues declined 6% due to significant prepayment fees in the prior year. Excluding prepayments, loan servicing revenue increased by 6%. Prepayment fees fell significantly beginning in the third quarter of last year, so the prepayment headwind should diminish going forward. Valuation revenue declined 6% in the quarter in local currency, largely driven by our U.S. business. In the U.S., we perform a significant volume of work for financial institutions. This business has slowed down this year as investors pulled back from investment into commercial real estate. Property Management net revenue rose 5% in local currency, increasing across most geographies with notable strength in Continental Europe and Southeast Asia.
Turning to our GWS business on slide seven. Net revenue increased 13% and SOP grew by 7% in the quarter, slightly exceeding our expectations. Growth was driven by the continued strength of our local business in the U.K. and expansion into the U.S. and an enterprise FM clients where we increased both the scope and geographic reach of our services. Demand for project management services also remained strong, led by our Turner & Townsend business. SOP margins declined from the prior year second quarter due to higher opex investments to support our local businesses, continued geographic expansion, as well as costs associated with integrating recent acquisitions.
Even though we expect these investments to continue through the balance of the year, full year SOP should be slightly better than we expected with the margin in line with last year's level. Our local business represents a tremendous growth opportunity, particularly in the U.S., which is expected to account for just 15% of this business lines net revenue this year. This business began with the Norland acquisition in late 2013. It has grown significantly from its original U.K. focus and net revenue is expected to grow by over 20% this year. Our pipeline remained elevated, more than 20% above the Q2 2022 level. The pipeline growth is driven by large first-generation outsourcers that are focused on lowering the real estate costs.
Turning to our REI segment on slide eight. As expected, SOP was down significantly versus the prior year when we generated a record SOP from this segment. Looking at the Investment Management business, nearly all of the operating profit decline was driven by lower incentive fees and modest co-investment losses versus co-investment gains in last year's second quarter. Assets under management fell by 1% driven by lower market valuations. The foundation of our IM business, which earns base fees on core and core plus assets remains healthy, and we expect co-investment gains and incentive fees to return when broader commercial real estate market conditions improve.
Turning to development. We realized a modest operating loss. As we have discussed before, it is important to look at this business over the long term versus any particular quarter. Our highly flexible financing structure allows us to hold on to completed assets if we believe they can yield better returns in the future and we continually evaluate our portfolio with that in mind. On a trailing 12-month basis, we generated $92 million in development operating profit compared to $544 million in the prior 12 months, a period of record performance. Due to anticipated asset monetizations in Q4 of this year, we expect higher operating profits for the full year than we realized over the trailing 12-month period.
As Bob mentioned, investors have begun to selectively deploy capital into development, favoring well-located industrial and residential projects. Our pipeline increased slightly during the quarter, positioning us well for a market recovery. Please turn to slide nine for a discussion of capital management and our balance sheet. During the quarter, we raised $1 billion of capital through a senior unsecured bond offering and shortly after quarter end, we raised an additional $350 million from refinancing and upsizing our euro term loan. We now have even more capacity to invest while maintaining an investment-grade balance sheet.
We have a robust M&A pipeline and are evaluating multiple opportunities in the range of $1 billion. We expect these investments, if completed, will drive meaningful shareholder value. We did not repurchase any shares in Q2 but have repurchased $100 million of shares month-to-date. Looking at free cash flow, we had originally expected to generate just over $1 billion in 2023. We now expect this figure to be closer to $600 million to $800 million for two main reasons. First, as noted, our expectation for earnings has declined, which has a direct impact to cash flow. Second, the cost of Trammell Crow Company development investments that are consolidated on our balance sheet as well as broker recruitment costs run through free cash flow.
We are seeing attractive opportunities to make targeted investments in both land acquisitions for future development and broker recruiting, and we now anticipate investing more in these two areas versus our expectation last quarter. I'll end with our updated outlook for 2023 on slide 10. As Bob noted, we now expect core EPS to decline 20% to 25% from last year's record level, greater than the low to mid-double-digit decline we previously discussed. Our original outlook anticipated a low teens decline in advisory SOP, a low double-digit increase in GWS SOP and a nearly 30% decline in REI SOP coming off a year when our development business produced $330 million of operating profit.
The incremental decline in our revised outlook is primarily driven by our view that the capital markets will not recover until next year. As a result, we expect lower investment sales and loan origination revenue than we anticipated 90 days ago and an extended time line to realize gains both in development and investment management. Looking at each segment, we now expect advisory SOP to decline by approximately 20% for the full year, a greater decline than we had been anticipating. In GWS, we now expect SOP to reach over $1 billion for the year or low to mid-double-digit growth, slightly better than we previously expected, with the margin on net revenue in line with 2022 level.
In REI, we now expect full year SOP in the low $300 million range, reflecting a 35% to 40% decline, slightly worse than we previously expected. The primary driver is lower than anticipated co-investment gains and incentive fees in investment management as well as fewer development gains. We expect core EPS in the second half to be heavily weighted to the fourth quarter. Beyond normal seasonality, we anticipate most development sales will take place in Q4, and the investments we're making in the growth of the GWS business will have an increasing benefit through the second half of the year. As such, we expect the fourth quarter to represent nearly 3/4 of second half core EPS.
With that, operator, we'll open the call for questions.
