Warning that economy will remain in dismal shape for a while, Blackstone Group Chief Executive Stephen Schwarzman urged people against buying real estate even at seemingly depressed prices.
You should keep away from that for now; if it looks cheap it will be cheaper, Mr. Schwarzman said in response to a question from a member of the audience Tuesday at the Japan Society, New York, where he was a featured speaker.
Mr. Schwarzman, whose firm acquired landlord Equity Office Properties in a $37 billion leveraged-buyout two years ago and promptly sold many of its buildings for top dollar, suggested potential real estate buyers sit on their hands. Wait for vacancy rates to stop going up for a while, he said.
In a similar vein, Mr. Schwarzman said that Wall Street firms will continue to contract and even more employees will be sacked, noting there remains a surplus of people in a shrinking industry.
The glamour and endless upside that young people believed in when entering financial services is going to be compromised, he said, adding that potential reforms in financial regulation may change the world weve all lived in.
Mr. Schwarzmans remarks came a week after his firm disclosed that he cut his pay by 99.8% last year, to $350,000, as Blackstone posted a $1.2 billion loss. Mr. Schwarzman pocketed $180 million in 2007 when he took public the leveraged-buyout firm he helped start 24 years ago.