Property derivatives spreads have fallen from 200 basis points to 280bp in the summer of 2006 to 20bp to 50bp for a December 2011 contract for an all-property total return swap. Is this a sign that the market sentiment towards property has fundamentally shifted, or is something else driving this? The first thing to note is that in the summer there was huge confidence in the returns from property over the remainder of the year – and this was borne out by subsequent returns.
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