RECOVERY & REVELRY
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|We learned yesterday that we’re in phase two of our recovery. (Anyone else nostalgic for phase one?) Capital markets are warming up, with increased transactions and a moderate price rebound. But we’re still anemic, which will continue to affect fundamentals for another 18 months, say ING research wizards David Lynn (US) and Tim Bellman (global).|
|Although the economy rebounded in the second half of the year, it’s going to be less robust than previous rebounds, says David. (Poor rebounds? Call it a Nets tribute.) The economy has lost nearly 7.3M jobs and we’ll continue into a nearly jobless recovery, he adds, couched comfortably at ING Real Estate Investment Management’s 230 Park Ave. confines. The best spots to be: where government, education, international trade, and health/biotech rule the scene. Investment opps in distress are still building for ’10, and originating debt will be a profitable biz. He says look for an uptick in sales from non-strategic and weakened owners, repositioning, and portfolio purchases/recapitalizations.|
|Tim, visiting us from the UK, notes that the international scene is recovering in varying degrees, but there's a more positive outlook.London and Hong Kong, particularly, are compelling opportunities. Real estate debt levels still remain a risk. China and Brazil will see better GDP in ’11, while Down Under, Canada, the US and France will only see slight growth. There’s subdued commercial real estate demand, and by ’13, most markets will still be below ’07 capital values. In ’10, retail and industrial returns will likely be higher than office, which will get stronger by ’12.|