Amid the doom and gloom that is increasingly enveloping the vast majority of western Europe’s real estate markets and the liquidity crisis that has stalled transaction volumes, global pension funds have not shied away from increasing their exposure to property investments. Indeed, as leveraged deals fizzle out in a flash of onerous debt conditions, cash-rich pension funds have begun to circle, looking for attractive property prospects.

A quick look at the newspaper headlines will quickly raise alarm bells for real estateinvestors. The United States is likely to experience little or no economic growth in 2008, the global economy looks to be entering at least a slowdown and indicators point to a period of deleveraging. Such factors will likely affect the global real estate market. But it is important to distinguish between the U.S. subprime residential real estate crisis and the prospects for the wider, mostly commercial, real estate market globally.

Although the value of the real estate capital market continued to grow last year to reach $12 trillion (Ä7.7 trillion), 2007 witnessed a sea-change in the global investment environment, following what the International Monetary Fund has labelled “the largest financial shock since the Great Depression”.