European real estate is attracting its highest level of investment since 2007 but this should not be seen as a warning signal to investors, according to Standard Life Investments.

Anne Breen, head of real estate research and strategy, said the diversity of investors active in the region means “this cycle is different”.

At a presentation in London, Breen showed how 12-month transaction volumes up to the end of June 2015 had matched levels last seen at the end of March 2008.

She said the difference this time was a globally diverse set of investors, some funded with cheap debt, some with large equity reserves but all investing “for different reasons”.

This diversity – including North American value investors, global opportunistic investors, “long-term investors” and those seeking capital preservation – “is not to be underestimated”, Breen said.

Standard Life Investments is predicting European real estate to outperform the rest of the globe over the next three years, delivering total returns of 9% versus 7.7% for the US, 4% for Canada and 7.7%.

The fund manager expects the UK to deliver double-digit returns this year and next; Standard Life Investments’ forecast matches those of the Investment Property Forum’s (IPF) market consensus at approximately 14% and 9%, respectively.

Breen said UK real estate would next year return to a “more normal environment” where income, rather than capital appreciation, makes up two-thirds of total returns.

Head of real estate David Paine said these numbers were “very respectable”, but returns could still vary widely depending on geographies and sectors, making asset selection critical. Returns in 2016 could vary significantly from the 9% average, from 4% to 15%, he said.

Standard Life Investments expects central London offices to continue to outperform the rest of the UK this year, but in a year’s time, a wider retail recovery will begin, Breen said.

The years 2017 of 2018 will be a “retail recovery story”, albeit performance will be polarised between strong, “dominant” shopping centres and weaker secondary assets.

All of Standard Life Investments’ predictions are predicated on Europe and the UK withstanding any fallout from China and emerging markets, said UK/European economist James McCann.

McCann said the fundamentals should be “robust enough” to counter a slowdown in global trade, although UK banks had significant exposure to China and the German economy was heavily reliant on exports to emerging markets.

A British exit from the European Union would also alter the projections, although the forecasts have already factored in a period of uncertainty prompted by a future a UK referendum on its membership of the EU.