Real estate valuations are expected to fall next year, with the low point in the cycle expected in 2010, according to LaSalle Investment Managements Investment Strategy Annual, a comprehensive survey of global real estate markets.
Commercial real estate will decline in value in 2009 as a result of a weak economy, troubled capital markets and deteriorating property markets.
The U.S. office market will be much weaker than in previous years. Office rents are expected to decline in 2009 and 2010, with the steepest drops in places like New York, where rents are at historic highs, the report noted.
Returns in Canada and Mexico will decline in 2009, although they are expected to outperform the U.S. The Asia-Pacific region is expected to outperform Europe and North America.
When the dust finally settles, we expect buying opportunities as great, or greater, than those created in previous down cycles, according to the report, issued today.
Attractive sectors could include REIT shares trading at a discount, interests in funds trading at a steep discount, non-performing loans or pools of partially performing loans, and defaulted land or development deals, the report noted.
Timing and magnitude of the opportunities will vary by country and region.