Valente argued that market prices are driven by liquidity, or lack of it, not fundamentals. "In every single market and sector – whether New York offices or Singapore retail – there is liquidity on the way up but it is when things begin to turn that the mystical substance liquidity disappears,” he said. “It is that which drives pricing, together with scarcity. It is nothing to do with the leasing market, nothing to do with fundamentals.”

Senior property professionals questioned whether the recovery is sustainable. Valente and Andrew Wood, chief investment officer at MGPA, argued the industry has failed to learn lessons since the market crash almost three years ago. Valente said: "I’m not convinced the industry has seen the error of its ways; this industry has not seen the light. Property is not difficult… A company takes space and pays rents. Keep your eyes on rents and the leasing markets; we forget that and each time we do not do that we get our fingers burnt. One year ago we were all going to die; 12 months on we are doing sub-4% deals in London and sub-5% deals in suburban Frankfurt. Have we learned any lessons? No we have not."

Wood agreed that many mistakes have been made. “Fundamentally, we overleveraged and over-estimated what the future would hold and, once the growth stopped we couldn't pay our debts. We underestimated risk and over-estimated opportunity. Certainly, recovery is an overused word at the present time."

Aberdeen Property Investors' head of investments Antonio Alvarez argued that some funds were mismanaged and investors failed to understand the risks. Both managers and investors have to learn from mistakes in the boom years, he told delegates. "When things were going well, many funds were mismanaged. Sometimes fund managers were conflicted or not careful about the financial risks of their fund… Many forgot that leverage has a dark side: it can help deliver double-digit returns but it can cause investors to lose everything. Good property people don't always understand the financial side or the risks within the underlying funds they are invested in. In future, they have to better understand these risks."

Schroders head of property research Mark Callender said that once the financial crisis in Europe is over, property markets and sectors will recover at different speeds due to wide expected variations in economic growth and vacancies across cities. “Future returns on an international property portfolio will therefore be less volatile than returns on a purely domestic portfolio,” Callender said. “Investors should limit exposure to markets highly integrated with the world economy – such as financial centres, energy and commodities – and set a minimum weighting to sectors relatively insulated from the global economy, such as retail, government-dominated office markets and doctors’ surgeries.”

A common focus of managers is to build a portfolio based on definitions of core and

non-core markets. This traditional, long-held distinction came under scrutiny by both

IPD’s co-founding director Ian Cullen and Eamonn D'Arcy of the University of Reading.

Cullen said that from the most core to the most opportunistic assets, IPD analysis shows, “a colossal spectrum of yields and income delivery in five of the most core markets that we can measure – Germany, France, Netherlands, the UK and Sweden… So what is the point in looking for core versus non-core market classification when we can see within markets that actually the spread is so huge that any labeling of a market is bound to be nonsense?”

Added d'Arcy: “The improvements in the quality and provision of information, combined with the increased standardisation of market practices and regulatory environment, have removed many of the traditional distinction between core and non-core markets in Europe. Instead of talking about locations, we should instead look at the characteristics of investors: are they sector or style specialists and look at the characteristics of the product itself.”

Allan Saunderson is a managing editor of Property Investor Europe and a contributor to GlobeSt.com.