After a couple of years of strong real estate returns in Europe and record low yields in prime property, there is a slight sense of déjà vu. Achievable returns on transactions at current yields are not dissimilar to those underwritten in 2007. And this has raised some concerns — does this mean that we are back in 2007? Is this the beginning of a new crisis?

We think that it is not. Instead, our claim is that we are heading toward a prolonged period of low returns rather than another crisis. There are, in fact, a number of key differences between now and 2007, including the low level of interest rates, the more resilient occupier fundamentals, the healthier banking sector, etc.

We will also argue that there are a number of enduring factors (eg. debt, demographics, inequality, etc) that should contribute to keeping interest rates relatively low in the medium term; and, with a low interest rate environment, returns on all asset classes (including real estate) should (