Risk-Averse Investors Driving Up Prices on "Trophy" Assets in Top Six US Markets
Wednesday, October 13, 2010
Source: Bloomberg
Bloomberg reports: Over the past year, while prices for commercial real estate have hovered near their seven-year low, reached in October 2009, a smaller subset of “trophy” properties in the highest-quality US markets have rebounded significantly. According to Professor David Geltner director of research at the MIT Center in Cambridge, MA, and creator of the Moody’s/REAL Commercial Property Price Index (CPPI), the current trend towards these “trophy” properties reflects current investor demand. “There’s a lot of money out there that wants to invest in good, solid, safe, cash-yielding inflation-protecting investments, and there are not that many properties on the market…Demand is really focused because it’s so risk-averse. They really want just these blue-ribbon cities and these blue-ribbon properties,” stated Mr Geltner in a recent interview with Bloomberg News.
Mr Geltner has developed a timeline index for just the top six US markets, including Washington, DC, Boston, Los Angeles, Manhattan, San Francisco, and Chicago. Juxtaposed with the broader CPPI, the two show a clear divergence in pricing between “trophy” assets in those six markets with properties in all other markets. Average prices for those top six markets have risen by 19 percent since reaching bottom, while average prices for all other properties have increased by just 1 percent. Both indices are based on repeat-sales transaction data from Real Capital Analytics.
To see more information and graphs on these indices, please visit the full article on Bloomberg’s site, or visit the Moody’s/REAL CPPI page on Real Capital’s site.
View the full article on Bloomberg: Risk-Averse Investors Driving Up Prices on "Trophy" Assets in Top Six US Markets
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Posted by: Nina Turner