Should We Fear the Fiscal Cliff? The U.S. Medium-Term Macro Outlook
In recent months, the debate around how far the U.S. economy will fall off the “fiscal cliff” has gathered momentum. In this paper, we assess the most likely scenario for U.S. economic growth and the public finances, as well as the likelihood and severity of the downside risk. We then translate these findings into the implications for real estate in terms of where the U.S. as a whole stands relative to the other major developed real estate markets.
European Shopping Centre View: Economy Slowing Down but Dominant Shopping Centres Resilient
At the beginning of 2011 retail sales continued to improve, and confidence in the sector was strong. However the positive sentiment came under pressure during the summer due to spillover effects from the debt crisis present in several European countries and a general economic slowdown. Despite the weaker retail trade outlook, interest in prime and dominant shopping centres remained strong. In addition international retailers are continuing to seek new prime locations. Retail trade is still expected to see positive but limited growth in coming years but will vary considerably by country. The continuously high demand from retailers for dominant shopping centres, combined with limited new completions, will result in modest rental growth potential for core markets and dominant centres.
Reflections on the Turmoil: Recovery Delayed But Not Denied
The recent downshift in global activity and turmoil in the equity markets has caused hand-wringing across all asset classes. Commercial real estate will clearly be affected by several factors including: Reduced economic growth prospects, curtailed occupancy and rent projections, and a more challenging strategy execution environment. But, real estate could also benefit, at least relative to other asset classes, as investors search for income, capital is drawn to stability, and interest rates remain low. The news is not good, but it’s also not time to panic. After four years of volatility, it may feel like déjà vu, but it’s not 2008 all over again.
The Grand Paris Project: Real Estate Opportunities and Risks
In an age of globalisation, key players in the market, starting with investors, increasingly focus their attention on the so called “world cities,” a recent concept which includes those recognised as the leading international financial centres. Paris (or, more precisely, the Paris region) falls into this exclusive category, along with London, Tokyo and New York, amongst a few others.
Time to Focus on "Next-Tier" U.S. Markets
One of the most striking outcomes of the Great Recession in the U.S. is the contrasting experience of the “haves” and “have-nots.” This is true for individuals: those who kept (good, full-time) jobs are, in many cases, better off than they were in 2007/08, whereas those who lost jobs are in dire straits.
Opportunities in U.S. Distressed Real Estate
Access will be the most important determinant of real estate returns for investments made in 2011. Today’s direct market prices are sufficient to generate acceptable but not exceptional returns over a five-year holding period. This will not be a repeat of the mid-1990s when investors were able to generate 15%+ IRRs simply by acquiring core assets from distressed sellers.
Navigating the New Normal: Lessons from Japan
It is now three and a half years since Bear Stearns lost its first hedge fund to the sub-prime crisis, and two years since Lehman Brothers collapsed. The economic recovery fuelled by fiscal and monetary pump-priming in 2009 now seems to be stuttering.