News
The
Cal State Companies: Center for Real
Estate Studies ¨ Cal
State Properties ¨ Cal State Investment LTD Partnership
Real Estate Markets In
This New Decade
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We at the
Calstatecompanies’ Center for Real Estate Studies (CRES) are encouraged
by most of the developments at the start of the new decade for the
prospect of the real estate markets.
The
deal between the US
and China
to resolve their trade disputes leads us to believe that our economy will
regain some strength in 2020, after suffering in 2019. Uncertainty
about future trade arrangements was one of the major drivers for
restrained real estate investment spending and the main reason why our
economy lost so much steam in the past year.
In
addition, the parliamentary elections in the UK in December 2019 and the
overwhelming vote to leave the European Union (EU) at the end of
January 2020 are also sent clear signals, which have reduced
uncertainty for the real estate investment markets. The UK left
the EU on 31 January.
The
uncertainty about a potential escalation of the US-Iran conflict also
started to abate as Iran
decided to avoid direct military with a token retaliation after the assassination
of General Soleimani by a US drone.
A development that may have an
immediate negative impact on our economy is discovery of the
coronavirus in China
and the spread of this disease to other parts of the world. Real estate equities have posted
losses since the discovery of the disease mid-January, with values down
by around 3%. So far, at the
time of writing, 14,557 people have been infected by the new disease,
around 99% of who are in China and only 1% in the
rest of the world, according to data from the World Health Organization
(WHO).
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In
contrast to the SARS disease in 2002/2003, China
has taken strong measures to curtail the outbreak of this coronavirus,
starting by notifying WHO immediately, restricting transportation and
tourism within China,
and expanding its capacity to treat infected people. In addition, many health research
laboratories are working intensively to find an appropriate vaccine.
Given these measures, there is a good chance of containing this new
infectious disease. With respect to the impact of this outbreak on our
economy, it depends on the length and interruptions of production.
In CRES’ view, the most important development
for our recovery is the partial resolution of trade tensions between
the US and China.
This shows that both countries are actively engaged in resolving their
current differences in bilateral trade. Consequently, we are confident
that the US and China
will continue to negotiate further trade arrangements to iron out the
remaining trade disagreements. This should restore real estate investors’
confidence. These developments will be closely monitored, and the
impact on real estate values will be continuously assessed.
ABOUT THE AUTHOR: Eugene E. Vollucci, is considered to be one of the
foremost authorities on real estate taxation and investing and has authored books in
these fields published by John Wiley & Sons of New York. He is the
Director of the Center for RE Studies, a real estate research
organization and President of calstatecompanies. To learn more about
the Center, please visit our web site at http://www.calstatecompanies.com
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