Our Top 10 Market Observations for 2014, Back to "Normal?"
As market conditions continue to improve with ample liquidity in both debt and equity markets, we have heard the comment more than once that we are back to “normal”, particularly in the US. While we have seen improvement in some sectors, notably technology and energy, capital flows across asset classes continue to outpace improvement in market fundamentals. Numerous factors are contributing to the acceleration of capital into the real estate asset class specifically, which is serving to sustain (if not stretch) current valuations and financing metrics across the globe. Economic growth appears to be accelerating, corporate profits are on the rise and employment trends are showing signs of improvement. But can we really say things are back to “normal” in the world of real estate – in particular, given lingering questions over market fundamentals, loosening underwriting standards and the potential for rising interest rates? During our recent annual company offsite, we considered a range of topics impacting real estate and the funds management industry and listened to the views of guest speakers representing institutional investors, consultants and fund managers. In this quarter’s Market Commentary, members of the Hodes Weill team share their Market Observations (and predictions) for 2014.