From the April 2010 issue of Treasury & Risk magazine

Real Estate Market May Be Hitting Bottom

The commercial real estate market may bottom out this year and that window of opportunity when investors can get the lowest prices may be opening and shutting soon, according to two surveys released in March.

Investors are feeling more hopeful about a turnaround than they have over the last two years, according to first quarter 2010 findings from PricewaterhouseCoopers' Korpacz Real Estate Investor Survey. Overall capitalization rates, a key measure of expectations of property income and value, have started to stabilize and even decline in certain markets. Respondents expect overall cap rates to hold steady in 19 of the survey's 30 markets over the next six months, compared to just two that were predicted to do so last quarter.

"Investors suggest that the bottom is near, if not here, particularly for better-positioned markets and assets," says Susan Smith, director of PwC's real estate advisory practice.

Economic indicators are pointing toward a potential recovery this year, echoes a report from Deloitte. But owners and mortgage holders are expected to continue to struggle with debt maturities this year, and foreclosures are expected to increase.


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