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Europe Real Estate CIO Spotlight
02/02/2026
Dr Ulrich von Creytz
CIO Real Estate, Europe
It’s about performance … and it always has been
Something unusual happened recently: an investor hugged me. It’s safe to say that I’ve experienced this sort of reaction only very rarely in my career. Before anyone gets carried away, I ought to stress that it was less an act of affection and more a display of gratitude. Specifically, my admirer was delighted that I had used a conference presentation to highlight the need for the real estate industry to refocus on fundamentals.
Why is this message so important?
The answer lies in understanding both the failings that emerged from the previous real estate investment cycle and the demands being imposed by the new cycle that is under way in Europe now. The previous cycle convinced some investors – and maybe even some asset managers – that real estate investing may involve little more than taking advantage of favourable interest rates and yield compression. The new cycle is already reminding us that what really counts is performance.
“It can’t last…”
The environment of low interest rates which developed in the aftermath of the global financial crisis encouraged many investors to look for substitutes for fixed income (FI). Real estate proved a popular choice, attracting massive capital inflows.
The prevailing mentality at the time was essentially one of “This is wonderful, but it can’t last”. Yet it did last, and the prevailing mentality duly metamorphosed into “Lower for longer” and then “Lower forever”.
Against this backdrop, even more FI-substitute capital flooded in. Rate movements became the dominant consideration for many investors. Without wishing to sound unnecessarily dramatic, I would describe this as the Devil’s work – an idea we’ll return to shortly.
Eventually, amid the far-reaching repercussions of the COVID-19 pandemic and Russia’s invasion of Ukraine, FI-substitute investors faced the reality of a return to higher rates. And thus the cycle stumbled to a close...