The real estate investment management industry has been on a steady upward trajectory in recent years. Its ascent has been fuelled in part by central-bank policies and volatility in the mainstream listed markets. In short, real estate has been a major beneficiary of low interest rates.

But it can also take some of the credit for its growth. The institutional real estate industry learned some difficult lessons in the 2008 financial crisis – principally one about the dangers of chasing returns, taking on too much risk and an injudicious use of debt. Leverage levels are lower today and the industry appears to be more disciplined.

Arguably, the real estate fund management industry upped its game just in time as the world’s biggest institutional investors became desperate for sources of secure, long-term income.

It is timely that we publish our latest ranking of the world’s 100 largest real estate investment managers. To see how assets under management have swelled in recent years, you only have to go as far as the biggest company, Brookfield Asset Management, which has topped the list five years in a row and has €153bn in real estate assets under management. In 2013, it had half the amount under management: €78bn. The full list is available here.

But with rising interest rates now a reality, the industry is about to be given its first major test since 2008. Recent moves by the Federal Reserve and Bank of England are small, first steps and have had no material effect on the real estate markets. But central banks will be under pressure to see through what they have started. They have signalled the beginning of the end of the low-interest rate environment.

“With rising interest rates now a reality, the industry is about to be given its first major test since 2008. Central banks will be under pressure to see through what they have started. They have signalled the beginning of the end of the low-interest rate environment”

On the day that the Bank of England’s monetary policy committee voted to increase interest rates for the first time in a decade, Chris Urwin, head of global research for real estate at Aviva Investors, said it was unlikely to have a major short-term impact on commercial real estate pricing, but it will mark the end of an era of “very strong returns” for the asset class. He said: “The gradual reversal of such policies means that we are unlikely to continue to experience the strong returns real estate has delivered over recent years. Returns are likely to be primarily driven by income from this point on. So investors will need to be increasingly selective against a more challenging backdrop.”

We look at what the advent of lower returns means for an asset class that has become used to strong performance. As we report, yield compression has slowed, especially in the US where figures suggest only 10% of major US office markets recorded any yield compression over the past year. Will a greater dependence on rental income – rather than capital appreciation – ultimately reveal the best and worst fund managers?

But focusing overly on interest rates could blind companies to other structural threats. Big data is changing the world, not least global finance. But while ‘fintech’ is booming, ‘proptech’ is somewhat behind.

We have already seen the likes of APG in the Netherlands and Union Investment in Germany begin to invest directly in companies that are pioneering the use of big data in real estate investment. This shows that the most sophisticated investors are serious about it, and some fund managers are looking to get ahead of the curve.

The majority of institutional investors today require managers to have sustainability or ESG policies in place before they will even consider investing with them. There could soon be a similar dynamic regarding the use of data and technology by real estate fund managers. As we report, the message is: watch this space closely or feel the effects of disruption.