Dr. Peter Linneman
“In recent years, Brazil’s strong GDP growth rate has earned it a spot among the overly-hyped BRIC nations (along with Russia, India, and China) as a great place to invest,” said Dr. Linneman, “However, it is important to keep in mind that the BRIC economies are growing from a smaller base than the U.S.”
Dr. Linneman went on to explain that in 2010 and again in 2011, with the exception of Russia, the growth in US dollars exceeded that of all the BRIC countries. “But growth for the sake of growth is useless; the real reason a country grows is to improve the standard of living of its population,” Linneman explained, “From a purely economic perspective, where would a nationality-blind consumer (or investor) choose to live (invest)? Would this consumer choose Brazil, Russia, India, China, or the U.S.? If given the option, most choose America. At the end of the day, the U.S. is a better place to put dollars to work in spite of high BRIC growth rates.”
“With the U.S. economy subject to economic martial law and our political leaders unable to achieve a consensus, one cannot expect growth faster than the current pace,” said Dr. Linneman at the Global Market Outlook in New York City. “A failure on the part of government to arrive at meaningful spending cuts has left an environment of uncertainty for global financial markets.”
In his 2013 Global Economic Outlook white paper, he explains, “We expect commercial real estate values to continue to rise as pension and private equity funds, banks, and asset management firms move capital into alternative investments in search of yield. The return spread between the “Gateway” and secondary markets provides an arbitrage opportunity for prime core and secondary assets. While cap rates should remain for the most part unchanged, we expect multifamily rates in most markets to experience some upward pressure.”
Many in the audience raised questions about investment activity as well as mergers and Acquisition deals. “Increased investment activity in the real estate sector will extend into the REIT industry, where we can expect to see another mega-deal in 2013,” Linneman answered, “The large M&A deals seen towards the end of 2012, such as the Avalon Bay/Equity Residential takeover of Archstone from Lehman Brothers, serves as a precursor to more consolidation in 2013. Should economic uncertainty be resolved, REITs will take advantage of low interest rates and relatively easy access to capital to execute mergers and to acquire private portfolios.”
The historic New York Athletic Club served as the venue for NAI’s Global Economic Outlook presentation as offered by Dr. Peter Linneman, NAI’s Chief Economist, and Jay Olshonsky, President of NAI Global. The audience comprised more than 200 commercial real estate executives and industry experts. The conversation focused on risks and opportunities in each of four regions including: United States, Europe, Asia, and Latin America.
In his latest white paper, “2013 Global Economic Outlook: Where are the risks and opportunities?”, NAI Global Chief Economist, Dr. Peter Linneman, evaluates the state of the global economy in the Unites States, Europe, Asia and Latin America.
“With the U.S. economy subject to economic martial law and our political leaders unable to achieve a consensus, one cannot expect growth faster than the current pace,” said Dr. Linneman. “A failure on the part of government to arrive at meaningful spending cuts has left an environment of uncertainty for global financial markets.”
On the European economy, Dr. Linneman notes that “The Eurozone crisis will continue to hamper growth in Western Europe, as the European Central Bank, the International Monetary Fund, and a consortium led by Germany and France continue to plug holes in an increasingly leaky ship.”
In the white paper, Dr. Linneman asks, “From a purely economic perspective, where would a nationality-blind consumer (or investor) choose to live (invest)? Would this consumer choose Brazil, Russia, India, China, or the U.S.?” Please click here to find out more by downloading “2013 Global Economic Outlook: Where are the risks and opportunities?”
PRINCETON, NJ, November 26, 2012 – In his latest white paper, “Real Estate Recovery is all About Job Growth,” NAI Global Chief Economist, Dr. Peter Linneman, outlines that without a robust job recovery, the real estate market will continue to be slow to recover. He states, “After peaking in October 2009 at 10% (revised), the U.S.unemployment rate stood at 7.8% at the end of September 2012, primarily due to 100,000 people leaving the labor force since June. Instead of a robust recovery spurred by the largest peacetime federal spending increase, the economy limps forward under the burdens of excessive government spending and regulatory incursions.”
He also cites, “The single most important indicator for real estate is the proportion of lost jobs that has been recovered to date. This is because at the beginning of the recession, almost all property sectors were in balance. As the recession set in, we lost 8.8
million jobs, and only as these jobs are recovered will real estate space demand approach 2008 levels.”
“Thus far, the U.S. has recovered 48.5% of Payroll Survey jobs and 58% of Household Survey jobs, leaving us 16
million jobs (1.9 standard deviations) below the historical growth trend. The U.S. added just 437,000 jobs over the last three months, a pace which is in line with the tepid 1.8 million jobs gained over the trailing 12 months through September. At the current pace, we will not recover all lost jobs until 2015.”
The white paper also addresses the health of the U.S. real estate recovery being tied to the strength and timing of the nation’s macroeconomic recovery and cites “the best news is that single-family and multifamily housing starts finally are on a clear ascent.”
A PDF of the white paper can be downloaded here:
About NAI Global
NAI Global is one of the leading commercial real estate services providers worldwide. Headquartered in Princeton, New Jersey, NAI Global manages a network of 5,000 commercial real estate professionals and 350 offices in over 55 countries, and completes over $45 billion in annual transaction volume. Since 1978, NAI Global clients have built their businesses on the power of NAI’s expanding network. NAI Global’s extensive services include corporate real estate services, brokerage and leasing, property and facilities management, real estate investment and capital market services, due diligence, global supply chain consulting and related advisory services. To learn more, visit www.naiglobal.com.
In his latest white paper, “Unprecedented Global Government Intervention,” NAI Global Chief Economist, Dr. Peter Linneman, discusses the dangers and pitfalls of an extraordinary wave of global government intervention taking place in capital markets. Citing historical examples, he demonstrates intervention only prolongs periods of stagnation and uncertainty. “In all, government activity is now deterring the very investment it was hoping to spur.”
As we enter the third quarter of 2012, we are seeing the pattern of unprecedented government intervention continue. Governments around the world are using the powerful tools at their disposal; spending, regulations, fiscal policy, and taxes to interfere with the free market in hope of sparking economic recovery. The result is that instead of recovery, we are experiencing further distress as the Euro crisis intensifies and even Brazil and China’s economies slow.