Looking to the GFC means you will miss the opportunities of 2025

I’m among a cohort of professionals who entered the workforce in the aftermath of the global financial crisis (GFC). All of us who did became well accustomed to the war stories; they crept into every conversation, and almost every deal we were looking at could be traced back to the distress caused by the GFC, whether from a non-performing loan portfolio or a developer in desperate need of equity.

The job at the time, for me and many of the others that had just entered the real estate private equity industry, was essentially one of repairing the damage and pursuing a recovery out of the depths of one of the greatest recessions of all time.

After experiencing another market downturn over the past few years, we now encounter a scenario where many senior executives of major firms, who are making decisions in London boardrooms, belong to the cohort that graduated immediately after the GFC.

Is it possible that these investors are waiting for similar signs of distress as last seen in the aftermath of the GFC? Although the shadow of the GFC still looms large for European investors, 2025 is not 2010. A correction like that of 15 years ago is not going to happen – this recovery is shaping up in a very different way. There will be no great epiphanic moment to signal that a new cycle has commenced.

Instead, it’s already happening. Indeed, we’re now at an opportune moment to deploy capital.

The difference that 15 years makes

The generation of young professionals that started their careers in the aftermath of the GFC is understandably biased based on the nature of that correction and subsequent recovery and could expect to look for familiar signs. However, the extent of distress at the end of this cycle has not materialised as so many had forecast.

With more modest leverage and developers who are generally better capitalised than they’d been before, there is a buffer this time around, and banks have been more relaxed about loan extensions in the knowledge that the interest is probably going to be paid until conditions recover, an exit can be agreed, and the loan repaid. This has even played out in the office sector where values have fallen the most.

Although I wasn’t in the market prior to the GFC, I sense the investment environment this time around is a much more cautious one with less mavericks and more analysts. With fewer risk-takers and more market participants than ever, it often feels as though there are a lot more reasons to say “no, not yet” than “yes, let’s go”.

But now is the time to be bold. There is an excellent opportunity at this point in the cycle to invest. That is particularly the case in prime offices, which were hit by a market correction and societal shifts from the pandemic, but – beneath the headline figures – strong fundamentals persist, if one can interpret what is structural and what is simply cyclical.

Entering the workforce in the wake of one of the biggest downturns ever seen in the real estate market was no bad thing: it was a training ground that gave many of those who are now in leadership positions resilience, a good understanding of market dynamics, and a healthy regard for risk (and reward). If we can combine those attributes with more of the entrepreneurialism that characterised previous generations, then 2025 could be a vintage year.