![]() The MSCI World Real Estate Index fell by a third from the start of 2022 to October 2023, signaling where equity investors believed property values were headed. The crisis has been a slow-motion slide over many months, as most properties are privately held and valuations can take years to adjust to shifts in demand. As prices tanked, the crisis began to affect the wider economy as banks were saddled with soured property loans, hurting their ability to lend, and cities were pockmarked with empty buildings. The troubles were compounded by the rise of home working and online shopping, which sapped demand for big, centralized workplaces and retail spaces. Then central banks jacked up interest rates to tackle a bout of post-pandemic inflation and a lot of properties suddenly looked like poor investments. Back when money in the bank was yielding almost nothing, commercial real estate became a haven for investors in need of reliable returns.
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