Savills Studley | Market Volatility and the Effect on U.S. Commercial Real Estate

From Savills Studley:

There’s been no shortage of volatility to start 2016. Amid dramatic sell-offs in global equity indices, commodities and emerging market currencies, financial markets have opened with a collective thud. Causes offered for the instability include: fears of oil oversupply, worries that monetary policy will be ineffective in boosting inflation and concerns over a China-led slowdown are all frequently offered as rationale. However, how does recent market volatility affect commercial real estate?

A confluence of events may lead to another year where U.S. commercial real estate holds up well relative to other markets in disarray.

1) Further U.S. dollar appreciation = added source of return for international investors
2) In times of trouble, real estate’s illiquidity may be a positive
3) Tax changes favorable for overseas investors in U.S. real estate…
4) …and U.S. index investors may need to rebalance and add as well

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