European property markets have experienced dramatic differences in fortunes in the five years since the onset of the global financial crisis, with the stellar recovery in some submarkets raising fears of mini-bubbles, while other sectors and geographies have still not bottomed out.

Prime real estate has rallied strongly in most of Europe’s major property markets, with the largest cities — such as London, Munich, Berlin, Paris, Copenhagen and Zurich — benefiting from global demand for investments with strong defensive characteristics.

This defensive flight to quality by investors in the early post–global financial crisis years has led to a compression of yields in the most competitive — and liquid — markets, such as London’s city office market and the resurgent German multifamily market.

During this period, Europe’s secondary property markets have largely continued to suffer from a sustained malaise, driven by a lack of capital expenditure in over