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Slowdown in Global Housing Markets Not Likely to Affect Multifamily
Published: April 14, 2008
By Anuradha Kher, Online News Editor
Washington, D.C.--Fundamentals of the multifamily market in many parts of the U.S. are strong and will continue to be so even as home prices fall around the world, according to Jeffrey W. Baker, senior managing director at Savills Granite, a real estate investment banking firm based in New York.
The U.S. housing crises has resulted in a synchronized global slowdown, which has become increasingly stark in recent months, reports the New York Times.
According to the paper, in Ireland, Spain, Britain and in parts of China and India, housing markets that soared over the last decade are falling back to earth. Property analysts predict that some countries will face an even more wrenching adjustment than that of the U.S., including the possibility that the downturn could become a wholesale collapse.
“This is not a distress story. There has been overbuilding in many parts of the world and now the bubble has burst,” Baker tells MHN.
According to Michael Cohen, a research strategist with Property & Portfolio Research Inc., “A slowdown in the global economy caused by the U.S. economic downturn could result in a more pronounced recession and a prolonged period of time in which there will be loss of jobs and lack of economic activity.” This, he says, could result in a decrease in apartment values here in the U.S.
The International Monetary Fund recently cut its forecast for global economic growth this year and warned that the malaise could extend into 2009.
Cohen points out that the global economic slowdown could mean that U.S.-based developers will pause before investing in foreign countries. “But China and India provide a compelling long-term benefit for the investors,” says Cohen.
Baker says, “There are large equity funds who are opportunistic and are looking for significant property appreciation. If property prices in a country have bottomed out, they will view them as a bargain. At the same time, institutional investors looking to diversify their companies may be concerned about this phenomenon and will have a ‘wait and watch’ policy.”
