With all the doom and gloom real estate stories being printed in the press and shown in the news you would think the real estate sector is dying yet again.
Apparently, RIETs, Sovereign Wealth Fund and Pension Fund owners did not get the message. They have been too busy snatching up property in New York, Washington DC and Miami?
What, you haven’t heard?
These cities are going through one of the biggest real estate booms in decades. In fact, commercial and residential rates are hitting pre-recession pricing and the lack of quality properties is driving prices to levels we haven’t seen since 2007.
The reality is that a flight from the stock market and miniscule treasury returns are driving investors with very deep pockets to the class-A properties in our top markets.
Are you wondering why haven’t you heard about it until now?
Many of the deals being made are off-market (the holy grail of today’s real estate transactions) and are so hush-hush that they only make the press after an investigative reporter discovers a transfer on a government website.
By following the Wealth Funds, REITS and Pension Funds we are beginning to see a trend emerge. These entities have been scooping up any class-A office or multifamily residential property that even smells like it may be for sale. Off market transactions are proliferating and properties are being flipped once again in Manhattan. We even have condominium developers selling units from floor plans.
While these trends are not national, the fact is that Manhattan, Miami Beach and Washington DC are catching fire. Just in the past year Carlos Slim Helu has increased his real estate portfolio in Manhattan from several townhouses to multiple office properties. The world’s richest man can’t be wrong, right?
Other signals that our top markets continue to be hot this spring and summer include: the Qatari and Kuwait Investment Authorities have committed over a billion dollars to two projects in Manhattan and Washington DC; China Investment Corp. is spending billions in the US by refinancing some of the best buildings in Manhattan as well as investing in malls by purchasing a 7.6 percent stake in General Growth Properties.
What does this mean to the everyday investor who doesn’t have a spare oil tanker?
Watch class-A real estate prices in the top US markets carefully. As the higher end of the sector continues to heat up, the rest will eventually follow.