It seems that the bears remain resolute for the prospects of real estate and by default the outlook for REITs. We could not help but notice the following headline from Bloomberg:
U.S. Commercial Property Won’t Recover Until 2012, Survey Says
Below is an excerpt from the article:
The U.S. commercial real estate market is unlikely to recover before 2012 and office rents in New York and San Francisco may drop 20 percent through next year, a survey of property investors found.
Suburban office rents could fall as much as 20 percent, while downtown office rents may decline about 10 percent, according to the quarterly PricewaterhouseCoopers Korpacz Real Estate Investor Survey, released today.
Yet the action of the market appears diametrically opposed to “popular” opinion. The REIT IYR looks as bullish as an angry commodity could ever be. It appears that real estate stocks will claw back all their post Lehman collapse losses within days.
There may well be more to the rise in REIT stocks than rents. We think that investors are missing the main driver of REIT stocks and that is property as a hard asset. REIT stocks are probably rising on the back of rising gold and silver prices than any outlook for rentals.
