The commercial real estate recovery that many investors hoped would take root has now started in earnest. Prime assets in core markets have led the way with strengthening occupancies, diminishing concessions and rising rents. The signs pointing to this recovery have not gone unnoticed, as evidenced by last year’s re-emergence of equity and debt capital and the pronounced decline in initial yields.

With pricing more aggressive today than a year ago, a central theme of global real estate investment is the trade-off between competitive pricing and income growth. Our expected returns for European and US real estate range from 7 percent to 9 percent per year over the next five years. In the Asia Pacific region, there is more diversity across markets, and we expect total returns there to range from 2 percent to 13 percent per year over the next three years.

We continue to see a solid recovery in growth across the globe and our long-he