There is an old Yorkshire saying that wise men do not buy crops from farmers before they have been planted. It is a piece of advice which investors in today's Alice-in- Wonderland commercial property markets should heed.

Everyone is scrambling over each other to get their money into office blocks and shopping centres, even where yields barely cover their borrowing costs. Prices, naturally, are increasing across Europe. I suspect that many are joining the scrum because they expect more capital growth - it may prove a dangerous game. Not necessarily, say the property professionals.

Instead, today's record low yields are justified because - even if prices stall - rental growth will sort everything out in due course. The argument may sound plausible. After all, rental markets have remained down in the dumps for the last five years or so. But the depressed situation may prove not to have been a fantastic buying opportunity. Why? Because in some markets things may get worse before they get better. For years, experts have claimed that the occupier market is about to roar into life.

Each time, it has turned out to be a false start. Jones Lang LaSalle, the property agent, is today releasing a report on office leasing conditions across Europe - a curate's egg if ever there was one. Double-digit vacancy rates are still the norm across European office markets, says Jones Lang. In the last year, rents have risen in Brussels, Dublin, Barcelona, Madrid, London's West End and Moscow.

They have stayed level in Paris, Hamburg, Prague, Amsterdam, the City of London and Budapest. But in many markets, they have fallen: The Hague, Utrecht, Stockholm, Warsaw, Berlin, Dusseldorf, Frankfurt, Munich, Milan and Rome. As for rent-free periods and other perks that agents use to lure new tenants, these have barely changed in most European markets in the last year.

Nigel Roberts, head of European research at Jones Lang, says leasing volumes for offices in Europe are improving. In 2003, 7m sq ft of gross space was taken up. In 2004, the figure was 8m sq ft. Because it is estimated that companies vacated more than 8m sq ft at the same time, this amounted to negative net absorption. This year, the firm predicts that occupiers will take on 8.5m sq ft - which would be neutral in terms of absorption. Solid rental growth should take place in 2007, predicts Roberts, as vacancy rates fall from their current double-digit levels. It is widely thought that supply will fall as developers lose heart and stop building any new kit.

For now, that seems to be happening - at least in most markets - with development more restrained than in previous cycles. In London, for instance, speculative development is still a tiny fraction of what it was five years ago. Demand, too, should pick up - say the experts - because it always does. And historically, when the tide does turn in occupier markets, it tends to turn very fast. Yet it is not so easy to see where the momentum is going to come from.

I am not an economics expert. But the prognosis for European GDP growth looks far from rosy, according to those who analyse these things. German, Italy and The Netherlands look particularly anaemic, while the UK may be coming to the end of its own growth cycle. The prospect of lower interest rates in the Eurozone - which ironically may encourage more investment - are a symptom of this lack of optimism. Nor is there the prospect of an exciting sectoral boom to mirror the excitement of the dotcom years.

Given that investors are buying into both offices and retail because they believe there is head room for bigger, faster, rent increases, something does not quite stack up. Another danger is that developers will start to believe their own propaganda - that, unless they move fast, they will miss out on the glorious times which are on the way. They may be more inclined to start on speculative projects if their rivals do so. In Paris, this is already taking place. If property supply is relaxed and demand stays where it is, investors are in for a disappointing ride.

Financial Times