So much money has been filtering into central Europe that yields in capital cities are now only a whisker over those in western Europe.
The managers of a new wave of listed overseas property funds like to offer investors an array of compelling "stories" involving economic growth and expanding domestic markets.
Execution of strategy - the most crucial yardstick of these vehicles' success - has not always been impressive, however.
Nowhere has this been more obvious than in central and eastern Europe, where some funds have been faster than others to find good investment opportunies.
So much money has been filtering into central Europe that yields in capital cities are now only a whisker over those in western Europe. Yields in eastern Europe have also fallen and are now more aligned with the rest of the continent.
Alastair Hughes, Europe chief executive of Jones Lang LaSalle, the agents, says there is a danger that the lower risk premium in the east European market could unravel.
"The difference between an office in Paris and an office in central or eastern Europe has narrowed a hell of a lot - that's an area that people have to be careful about," says Mr Hughes.
Prime yields in western Europe have fallen from 6.25 per cent to 5 per cent while in Budapest they have dropped from 8 per cent to 5.25 per cent, he points out.
Jean-Michel Gault, finance director of Klepierre, the French listed property company, says some investors failed to pay a sufficient risk premium. "There was no real distinction between prime assets in France or the UK and secondary [assets] in, say, Hungary or Poland."
Guy Barker, European head of Palmer Capital Partners, believes most of the European vehicles launched in the past 18 months were "too late" to catch the trend of "yield convergence" across the continent.
By the time many funds were fully invested they had missed the boat, says Mr Barker, former European head of real estate at Invesco.
"The pressure has in many cases led to some rather lazy investments, ones that won't necessarily stand the test or close scrutiny," he says. "They are likely to slightly disappoint."
At the same time, the cost of finance has increased in the region as swap rates are higher than before. German open-ended funds and traditional central European funds have emerged as the most active buyers of real estate.
"The rising cost of finance has taken the speculative and highly leveraged capital out of market," says Gareth Jones, head of capital markets for the region at JLL.
"Whereas a year to 18 months ago there would have been 12 to 20 parties chasing every deal, there are now typically between four and eight bids per transaction."
The gap between prime and non-prime assets, which had diminished to almost nothing, has since moved out again to nearly 200 basis points, says Mr Jones, as the price of secondary property has in some cases fallen.
Some specific markets will still provide rental growth, he says, for example central Warsaw and parts of Prague and Budapest. But rents are more muted elsewhere.
"We remain confident that the market will be strong for prime stock - as elsewhere in Europe there is flight to quality at the moment," says Mr Jones. "At the same time, for highly leveraged investors and investors that have hedge fund equity in their capital pool we have seen market disruption."
Put simply, the wave of capital targeting many of these markets dwarfed the amount of established property which was for sale.
"The problem in eastern Europe is that there is very little product there, set against the amount of money trying to invest. There are a lot of people who have been there for 10 years," says Mr Barker.
European Convergence Property is one fund that found it difficult to invest money as fast as it would have liked. It admitted in early 2006 that it was months behind its schedule. In August this year it said it would sell its remaining property and wind itself up.
Equest Balkan Properties floated in late 2005, aiming to buy investment properties and development sites in east European accession countries. At the time of the launch, a typical yield of 10 per cent was deemed achievable.
But with yields dropping rapidly since then, management has since shifted its focus more towards development. The move has not been warmly welcomed by shareholders, who have rewarded EBP with a fall in the price of its shares. Mike Foster, analyst at KBC Peel Hunt, says: "We believe the management has done the sensible thing in optimising the portfolio, given the changed circumstances." Another group, Engel East, said in August it would not pay a first-half dividend this year.
The more "vanilla" investment vehicles are likely to be superseded by established companies that have development portfolios on the ground.
So who is likely to survive the squeeze in yields?
Guy Meyohas, an Israeli-born property investor, has been doing deals in Bulgaria for the past seven years. During that time he has seen institutions accelerate their spending in the east European country.
Mr Meyohas is a co-founder of Orchid Developments, which floated on Aim in the summer of 2005, raising £20m and giving a market capitalisation of £80m. Orchid's share price has moved upwards ever since and last year it raised another £25m. Mr Meyohas says the secret of the group's success is that it acquires land and develops projects rather than just buying "dry" - that is, completed - product from others.
"Most of the other funds that have been raised are looking for ready product. We are the machine creating product for others," he says. Among Orchid's schemes is a 2m sq ft mixed-use project at Varna on Bulgaria's Black Sea coast, which will include a big Carrefour hypermarket.
Experts say more funds are likely to target markets where yields are still in the double-digits - in Russia, for example. Aisi Realty Public Limited floated on Aim this summer to target the Ukraine, where yields have fallen but are still higher than elsewhere in Europe.
And there is a new trend for dual listings. London-listed Plaza Centers and Atlas Estates are thinking of listing in Warsaw.
