For years now, European real estate investors have enjoyed the good life — easy money, improving fundamentals and robust demand for all property types. But suddenly, in the summer of 2007, investors found themselves in a new environment. Debt became very expensive. Yield compression appeared to stop or even reverse course. And transaction velocity slowed as investors headed for the sidelines. Does the new investment climate pose unforeseen risk, or is it an opportunity for cash-ready buyers?

Sentiment in the European office market has, until the credit crunch hit, been relatively upbeat, as buoyant business confidence coupled with improving employment prospects added weight to office sector performance. Nevertheless, more expensive borrowing and a heightened uncertainty in global finance and credit markets have left their mark on real estate since the late summer of 2007.