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 According to the "Emerging Trends in Real Estate" 2009 report released by the Urban Land Institute (ULI) and PricewaterhouseCoopers, Real Estate industry experts expect financial and real estate markets in the United States to bottom in 2009 and then flounder for much of 2010, with ongoing drops in property values, more foreclosures and delinquencies, and a limping economy that will continue to crimp property cash flows.
Now in its 30th year, "Emerging Trends" is the oldest, most highly regarded annual industry outlook for the real estate and land use industry and includes interviews and survey responses from more than 600 leading real estate experts, including investors, developers, property company representatives, lenders, brokers, and consultants.
The report goes on to say that many home owners are drowning in debt, lenders are not lending, and for many (industry professionals), property income flows are declining. Only when financing gets restructured will pricing reconcile, giving the industry a point from which to start digging out of this hole. "The cyclical real estate markets always come back and they will this time too, but not anytime soon", said Tim Conlon, partner and U.S. real estate sector leader for PricewaterhouseCoopers. The report acknowledges that commercial markets will recover more quickly than most housing markets, and home builders may have to sell land tracts for "cents on the dollar" or face foreclosure on their holdings, adding to the already high rate of mortgage defaults and foreclosures.
So where do we invest our money now for the best return on investment while the housing industry faces more foreclosures and no rebound in values for 2009? "Emerging Trends in Real Estate" reports the "Best advice for 2009": Invest in construction bridge loans or take mezzanine positions and equity stakes in properties.
Right now "bridge lending experts" expect to return between 12% and 14% interest to investors over the next two years. In 2007 Arctus Capital, www.arctuscapital.com, was formed to take advantage of market opportunities created in the real estate financing realm due to the significant tightening of conventional sources of real estate finance. |