If you look at the banking sector response to this crisis, it appears that the further east you go, the more demanding your typical lender becomes, said Mike Sales, the London-based head of property at Henderson Global Investors.

Steve Smith, head of transactions and asset management at AXA Real Estate Investment Management said his firm had delayed its expansion into Asia pending an uptick in investor sentiment.

Similarly, Eurohypo has pulled out of 18 of its 28 national markets to refocus on core opportunities.

Even mature property sectors will have to learn to live with bland, expensive mortgage markets that bear closer resemblance to those seen in poorer countries.

Many investors believe they will only be able to borrow up to 60 percent of a building purchase price at best, with triple-digit margins on loans, longer lease demands and higher income to interest cover ratios.

Banks have realized this is too risky, and that part of the problem they are having right now is they have been too accepting of high loan to value ratios, said Reinhard Kutscher, who chairs the board at Germany's Union Investment Real Estate.


Banks are wary of adding to their property risk burdens but several Summit guests believed they were unlikely to liquidate their positions and realize losses rashly.

For UK banks, foreclosure is still very much a last resort. They want to manage these problem portfolios, either with the incumbent investor or a specialist adviser, Sales said.

We have seen few foreclosures in the UK, Germany or France and I think that will remain the case, he said.

Sinclair confirmed his bank was making every effort to extend and rework loans to avoid unnecessary foreclosures, which he described as an exercise in the destruction of value.

We want to try and avoid that at all costs. When I started at National Westminster Bank in the early 1980s, they were still working through loans from the early 1970s, Sinclair said.

I can see we will be doing the same, nursemaiding deals from 2005-2007 in the years to come, he said.

Others speculated this softly-softly strategy was borne of need, rather than choice.

I had a meeting with someone yesterday who said that if all banks marked their real estate loans to market, they would basically be insolvent, LaPuma said.

I don't know whether he's is right or wrong but I do know that real estate to most of them is a four-letter word.