There are striking similarities between the situation in the bond markets two years ago, as the global economy passed the nadir of the financial crisis, and the European real estate investment market today, and this might foreshadow a similar market outcome that will start to develop in the coming months. Two major emerging challenges for investors — in the form of tougher market regulation and possibly rising inflation — are, however, likely to interact very differently with the property and fixed income asset classes.

Back in early 2009, government bond yields were tumbling under the weight of capital flows seeking a safe haven from the extreme volatility in the markets, and spreads to corporate debt and the high-yield end of the spectrum, in particular, widened dramatically. As risk appetite gradually returned and interest rates remained at rock bottom, investors poured into the high-yield market for the strong returns available, spurring a ra