Here are some short thoughts on topics of relevance to real estate investment. You can subscribe (without entering any personal data) by linking this page to your RSS feed.
Since the financial crisis in 2008, interest rates have been low and borrowing costs for commercial property similarly low. With such low rates, relatively high yields and seemingly ever-increasing values, many have chosen to use “prudent” leverage. We may be about to find out how prudent those leverage decisions were.
Read MoreA number of UK open-ended real estate funds have, for the first time, suspended trading due to “material uncertainty” of the independent valuation of the properties in the fund. The corollary is that property funds are inherently subject to price uncertainty but that there is a point at which that uncertainty is immaterial, given that they are not permanently suspended. What does “immaterial uncertainty” look like?
Read MoreA famous quotation, probably erroneously dedicated to the financier J. P. Morgan, is that, when asked for an outlook on the stock market, he replied, “it will fluctuate”. The real estate market tends to fluctuate too, between two states: “no brainer” and “cautiously optimistic”. But now is the beginning of a new year and time for something more nuanced.
Read MoreThere are a lot of books; here are a few that may be of interest. They are not real estate investment books, but sometimes real estate investment doesn’t seem to be a lot about real estate, or, indeed, investment.
Read MoreResearch suggests that easily understood, often-repeated statements underpin the “illusory truth effect” and knowledge that these statements are false makes little difference to believing them. Does the statement that “property is an inflation hedge” fall into this category?
Read MoreMacroeconomic forecasts are uncertain and are used as inputs to real estate forecasts. Central banks produce fan charts to accompany their forecasts. Shouldn’t property forecasters do this too?
Read MoreThe global real estate markets have been buoyed by unconventional policy measures aimed at stimulating an economy. The shadow interest rates that have resulted have been negative, and continue to be in some markets. What rates of rental growth are consistent with these?
Read MoreTurning points happen infrequently, but when they do it is very valuable if you can forecast them. There is a quick and simple way of working out how good you are at this.
Read MoreLower volatility should not translate into higher returns. But, being different, in real estate it looks like it does, until you unravel the interdependencies between volatility, liquidity, prices and valuations.
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