There is no end in sight for the long-lived U.S. economic and real estate market expansion, according to leading real estate economists. These projections are based on a special year-end version of the “ULI Real Estate Economic Forecast,” prepared by the ULI Center for Capital Markets and Real Estate. The forecast is based on a survey completed in December by 27 economists/analysts at 24 leading real estate organizations.
Some of the best minds in commercial real estate seemed a lot less worried at the 26th annual ULI/McCoy Symposium on Real Estate Finance, held in December in New York City. Participants’ top message: investors keep pouring their money into office towers, apartment buildings, and other real estate in the United States despite high prices, worries that the U.S. economy could fall into a recession, and the uncertainty that accompanies a presidential election year.
At ULI South Carolina’s Capital Markets Conference, panelists outlined strategies that are leveraging the strengths of the private sector to create and preserve affordable housing in areas experiencing rapid growth.
Sam Chandan, associate dean of New York University’s Schack Institute of Real Estate and host of the Real Estate Hour on SiriusXM Radio presented his economic forecast for 2020 at a ULI New York event in November.
The ULI/Allen Matkins Capital Markets Roundtable, now in its fifth year, brings together investors, developers, lenders, managers, and intermediaries at the ULI Fall Meeting to share insights and perspectives on the current and future outlook for real estate capital markets. Panelists discussed what is working for their firms.
After several years of steady growth, Asia Pacific real estate continues to produce strong returns, but caution is increasingly embedded into investor strategies, according to Emerging Trends in Real Estate ® Asia Pacific 2020, an annual real estate forecast jointly published by ULI and PwC. Singapore, Tokyo, Sydney, and Melbourne are ranked as four of the top five markets for investment prospects, reflecting investor preference for regional markets that are large, liquid, and defensive.
The persistent theme over the current economic cycle of “lower for longer” growth has contributed to a record expansion cycle that has surpassed 10 years. Results from ULI’s latest “Real Estate Economic Forecast” show that trend is likely to continue into 2021, said panelists speaking on a webinar discussing the survey results.
Despite record amounts of capital seeking deals, market nuances must be navigated.
Interest rates have been on a roller-coaster ride over the last year, but cap rates are largely unchanged. The result of these moves is that cap rate spreads relative to the safe investments in the 10-year U.S. Treasury bonds have moved back to the levels seen in 2017. Given everything that has changed over the last year—as well as everything that has not—there may be room for cap rate spreads to move lower.
At the 2019 ULI U.K. National Conference, a panel on the practicalities of real estate investment reflected on the opportunities and challenges, not least in terms of the impact that Brexit is having on investor sentiment, as well as where we are in the market cycle. Multifamily continues to do well, while retail is struggling as in overbuilt markets.