A gamble on (un)real estate...

IIPM PUBLICATION

Well, with rental rates in coastal regions estimated to rise by 5-10% (till 2012), according to Heltman Financials, Blackstone indeed seems to have struck gold with most Equity Office’s properties in these regions. Robert Haines, Analyst, CreditSights Inc. asserts, “These are irreplaceable assets in supply constrained areas of the country.” Could we say that the future is looking great?

Perhaps not. The main concern comes with expectations that real-estate rents will plateau out, and not pay rich expected dividends. The Builders’ Economic Council Survey 2006 showed the fall in enthusiasm among real-estate builders in US with only 35% positive responses in January 2007, as compared to 72% such responses in June 2005, when asked about the sector. Even Fortune (with propertyvaluation service Fiserv CSW) has estimated that growth for 2007 will be fl at as compared to a 7% appreciation in 2006. There are times when overt exuberance could cost you dear. Or should we say, make you sink like a (Black)stone!

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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