What do you mean, the party's over?
Cassandra had the misfortune as a prophet to be always correct and never believed. Hans Schliemann's digs showed what this meant for real estate values in Troy, with layers and layers of burnt city in a cycle of restoration and destruction. LaSalle Investment Management take a leaf from her book in predicting that there will be a downturn (not a hard one to make) but hope that they will be believed by recommending taking out the equivalent of futures in wooden horses and buying counter cyclical stock, identifying three areas for the short term and planning for the inevitable.
So, how long do you think before the music stops?
As concerns about the global economy weigh on stock markets, real estate investors are being advised to prepare for the next downturn in their sector.LaSalle Investment Management has published its latest strategic note, advising investors “to take out cycle insurance” to safeguard against the advent of falling or plateauing values.The company’s investment strategy annual recommends taking precautions as more markets enter a mature phase in the “real estate pricing cycle”.It recommends reducing portfolios of non-strategic assets, reducing leverage and being aware of liquidity needs if and when credit tightens.
American Realty Advisers agrees ”Despite the warning signs, some investors continue to take on more risk, seeking out smaller markets in search of marginally higher yields at a time when prices are elevated, the economic recovery is entering the mature phase, global growth is weakening, and financial market volatility is increasing.
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