Leaping into the gap

During the worst days of the sovereign debt crisis last summer, the feeling was that this was another grim episode in the seemingly never-ending gloom that has been enveloping western economies since the financial crash. Now that the Greek rescue package has finally been ratified, fears of a euro zone break-up are receding - but the picture is still far from rosy. The austerity measures being implemented across the EU to deal with government debt carry with them the threat of not just another recession, but also dampen the prospects for economic growth for years to come. For a real estate sector badly burned by the credit crunch, however, the euro zone crisis may turn out to be a blessing in disguise. As a consequence of all the recent sovereign debt crises, government bonds - once seen as one of the safest forms of investment - are now providing much lower returns. Yields for prime European property, on the other hand, have fallen only marginally, in the process widening the yield gap