The Principal recently published a white paper on the opportunities in real estate. Below is the executive summary. To read the entire paper, please click here.
While the current U.S. economic recession has resulted in decreasing commercial real estate values and weak space market fundamentals, now may be the time for the nimble investor to begin acquiring private equity real estate assets. Capital markets tend to overshoot during a downturn, requiring risk premiums in excess of actual risk of the asset. Acquiring properties before space market fundamentals start to improve should allow the investor to outperform as the market improves. Based on recent economic measures, 2010 may be the time to re-enter the U.S. market. This paper discusses the reasoning for why 2010 may be the turning point as well as considerations the prudent investor should consider as they implement a U.S. private equity real estate strategy.