Real estate may be facing some hefty challenges — the euro zone sovereign debt crisis, the likelihood that boom-era investments will fail to refinance, and expectations that valuations and rental growth will continue to disappoint. But real estate managers are hopeful that weak performance in other asset classes — namely government bonds — will entice increasingly cautious investors to property.

Paul Jayasingha, head of real estate at Towers Watson, says that while real estate has disappointed investors post-crisis — partly due to issues caused by leverage and the deferral of redemptions in real estate funds — low bond yields have led to a willingness to invest in property for lower expected returns than in the past.

Rob Martin, head of research at Legal & General Property, explains: “The valuation of fix