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Home arrow News arrow Real Estate's Role in the Post-Bubble
Real Estate's Role in the Post-Bubble Print E-mail
Wednesday, 02 August 2006
Real estate still stays to be an investment category with more emotional baggage than the rest. It also shows that there is a continuing gap between the way investors may understand their personal real estate holdings and their outlook on the public securities market for real estate.

Many investors, especially those heading toward retirement, are becoming hungrier for profit and yield. Despite of the volatile times for the cyclical world of real estate, many real estate stocks still continue to allow for solid returns and offer growth capacity among investors.

Property type variables for local, regional and national property and capital markets conditions, management experience and maturity, and even luck, all have major roles in determining how companies perform. The coming of investment capital into commercial real estate stocks has paralleled the overall growth of real estate development.

This has caused increasing sophistication to real-estate capital markets and spurred the continuing consolidation of real estate management and brokerage from local to national and even international ownership structures. REIT stock valuations are connected to interest rates. However, the question remains. As interest rates rise, will interest in real estate fall?

In real estate, more opportunities arise as up or down movements in various property types and markets force owners and operators to maneuver their holdings to take advantage of or defend against trends in office leasing, consumer behavior, travel, logistics and housing.

The National Association of Real Estate Investment Trusts, an industry trade group, reported that around $1.7 trillion in real estate transactions happen every year. Together with REITs, the grand total includes the institutional and private-equity buyers, single-family homebuilders, real-estate operating companies and land companies.

To summarize, the real-estate securities world is an active and exciting market that is sure to experience great growth in the coming years. However, there is also a great change that comes with concomitant risks and rewards.

By M. Sese


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