We have the impression that economic cycles are faster than ever and balances are more fragile… we live in a moment when:
- Political risk is the new major risk, where populism and lack of strong European political leadership are key issues. The present moment we are living in Barcelona is just one of many examples.
- Major stresses from last cycle are unsolved… it seems European gov’ts give up to solve the debt problem. The problem is unsolved.
- The liquidity trap is fueling asset prices (stocks, bonds, property), with low impact on industrial and reproductive investment and with a small impact on inflation. We live a new order, where known macro-economic models seem not to apply.
In the real estate market a few specific impacts shall be observed:
- Core assets returned to low record yields, unseen even in the last cycle, and 4% to 5% yield is equivalent to 20 - 25 years to recover an investment. Real economy is not returning upside rents, as productive investment and new job creation is not taking off at same pace.
- Residential development is returning after 10 years of stagnation, and attracting international opportunistic investment. Bank debt based on low rates will be again a model to subsidize house buyers?
- New disruptive technologies will change the face of real estate… and are long term shift drivers for our future. E-commerce and electric mobility will change the way we live in the next 10 years. How today’s investment decisions are taking in account these changes?
I would like to say thank you for joining and for be willing to share your best experience and advised thoughts, to allow us all to have a more comprehensive understanding to support best investment decisions.