The value-add playbook of the post-financial crisis era was to acquire properties below fundamental values from financially overstretched owners and leverage them with cheap debt. The recovering economy took care of vacancies while rental growth resumed. Exiting to cash-rich core investors, at historically low yields delivered very attractive returns. Arguably, the results were a reward for bold market entry rather than any particularly strong effort by the new owners in the holding period.

The root cause of the current market reset is different, hence the treatment will have to be different. The last two down markets (dot.com bust and GFC) were characterised by financial and occupier market stress, relieved by central banks lowering interest rates. This time round, conditions are the polar opposite, with substantially higher interest rates and occupier markets remaining resilient.

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