For a capital-intensive asset class such as commercial real estate, the impact of tighter debt has been swift and significant. Transaction volumes in both the US and the UK have fallen. Prices for commercial buildings have retreated 10 per cent or more from the frothy first half of last year. For the past four months the UK IPD index registered the first negative returns since June 1991. US real estate investment trusts (reits) have also fallen in value by 20 per cent in 2007. UK reits have fared even more poorly (-38 per cent) in their inaugural year.

Yet, these headlines are only part of a much larger story. The bigger picture would show that commercial real estate is now a global asset class – just like stocks, bonds, and private equity. While the US and the UK have hit an air pocket, real estate markets in Latin America, Asia and eastern Europe are still climbing. The diversity of commercial real estate markets in these countries means that the ripple effects of credit tightening are felt quite differently in cities around the world.