Fear was the watchword for most at MIPIM, the world's biggest real estate show. While not all the 29,000 property professionals attending the fair would agree entirely, the atmosphere was palpably different to last year's event.
There was a clear sense that the bull run of the past three years was over and tougher times lay ahead.
At a presentation on emerging trends in Europe held by the Urban Land Institute, delegates were told of the repricing of risk and the idea that "fear is back".
Patrick Leardo, principal at PricewaterhouseCoopers' US real estate practice, coined the phrase "hope-o-mistic", to describe the desperately hopeful perspectives many were now adopting.
He said it would be a three speed year: corrections in select markets (the UK and Spain were tipped as likely to suffer); stabilisation in most markets; and chasing deals in others, notably Eastern Europe.
Erik Sonden, managing director at Societe Generale, said: "We have to move away from a state of denial. My view is that we will see a price correction over the next 12 to 18 months."
The price correction would take so long as there were few forced sellers. "Any seller who is not forced to sell will remain in denial," said Sonden. The liquidity crisis was beyond anybody's experience, added Sonden.
"When the crisis started, we all thought it would be over in four weeks. Now in March, most people think 2008 will be difficult," said Bernd Knobloch, CEO of EuroHypo.
The improper pricing of risk led to too much liquidity. "We now have a chance to get the right price from a banking point of view," said Knobloch.
Gerald Parkes, managing director private equity at Lehman Brothers, said nobody knows how long the current situation will last. "The credit crisis is still very much upon us. It's as bad as it was back in August. Gradually, credit will come back into the market as Wall Street will work out how to shift stuff off balance sheets," he said.
The bigger issue, however, was when the smoke clears, what the damage is to economies. Already we are seeing a slowdown in a number of economies, he warned.
In a separate press interview, Mike Strong, who heads up EMEA for advisers CB Richard Ellis, said that there were a few positives that can be taken from the current market. In particular, real estate fundamentals were sound.
"In both of the previous downturns, the fundamentals were not good. There was overbuilding and an economic downturn," he said. Today, by contrast, vacancy rates are low and falling with rents rising. "The traditional things that matter about real estate are positive," said Strong.
The main issue in the current market was uncertainty, whether buying should be done now or later. "It's whether we should buy at all," emphasised Strong. London, he said, had been repriced quickly with a 100 to 125 basis points shift in prime yields.
"This has brought buyer confidence. At the prime end, you have good demand from high equity buyers," he said.
In previous downturns, the repricing had taken much longer. "Let's reprice and get on with our lives," he said.
If the credit markets do not clear by the end of this year, then there will be real distress, he admitted. "But there is no need to anticipate that," he said.