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Brace For Impact In Real Estate, Pension Real Estate Association Conference

By Feux Follets following x   2018 Mar 12, 2:30am 200 views   0 comments   watch   sfw   quote     share    


Winter is coming to the economy — or at least a substantial snowstorm — that will impact real estate in a few years, said Kenneth Rosen, chairman, Fisher Center for Real Estate and Urban Economics at UC Berkeley to an audience at the Pension Real Estate Association's Spring Conference in Beverly Hills, Calif.

"We have a sea change going on," Mr. Rosen said. There's "an inflexion point" that could lead to a downturn in the next few years, he added.

For example, defense and non-defense spending could "explode the budget deficit," Mr. Rosen said. Another risk to the economy is that interests rates have been kept too low for too long, and the easy money can cause asset bubbles.

"We have a sea change going on," Mr. Rosen said. There's "an inflexion point" that could lead to a downturn in the next few years, he added.

For example, defense and non-defense spending could "explode the budget deficit," Mr. Rosen said. Another risk to the economy is that interests rates have been kept too low for too long, and the easy money can cause asset bubbles.

He recommended that real estate managers hedge against the coming headwinds.

"There will be a sugar high in the next couple of years" of economic growth," Mr. Rosen said. "We have had two years of extra innings (in the real estate industry), but we will see rising interest rates and capitalization rates are moving up."

Returns for core real estate could stay in the low double digits or it could turn negative, he said.

"Don't think the last five years will repeat. Stress (test) your portfolios," Mr. Rosen said.

More: http://www.pionline.com/article/20180309/ONLINE/180309807/brace-for-impact-in-real-estate-prea-conference-attendees-told

#Investing #RealEstate


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