Real estate market and interest rate rise in the United States

The Fed of the US Federal Reserve is on the table this week, and I do not think the situation is “never” so good. The market has expectations and justifications both for and against raising interest rates. Generally speaking, the rise in interest rates is a good thing as it in a way discounts inflation and economic growth (especially the rising yield curve). At present, however, the world is struggling with the deflation wave, so it is very difficult to see interest rates rise. If the Fed were to raise the key interest rate, it would have an impact on growth and market, and then long-term interest rates should fall. In Europe, interest rates can not and should not rise. If the level of interest rates in the southern European countries rises too high, the entire euro project is in jeopardy. The biggest technical threat to Fed’s interest rate rises is that, that the emerging markets and China sell large volumes of US Treasury and euro-denominated loans to defend their currency (currency swaps). This would probably be temporary, and such turbulences generally result in currencies and interest rates, such as the US dollar and the euro, being held safe haven.

Short-term interest rates, which usually frustrate investors and result in some REIT * sales, and lead to a positive correlation between interest rates and REITs, are usually provisional. Empirical studies (the figure below from the NAREIT summaries of 1995), to which we have previously referred to, indicate that REITs will remedy any weaker development in about 6 to 12 months. This was the case, for example, after the “taper” crisis of 2013, when the Governor of the United States of America referred to the gradual cessation of QE, ie quantitative recovery. At that time, REITs fell temporarily and returned during the next year. The next two years gave a good about 9.5% annual return to the investor,

Property in the Current Situation Interesting Property

Class In the long term, interest rate swing or thinking is not so important to a real estate investor or a REIT investor than for an active stock or fixed asset manager, for example. Interest rates will rise and fall, short-term profit-making will come and go, but the mass of tens of thousands of real estate below and its lease stream in the broader REIT portfolio will “force” the value of the portfolio upwardly without interest, as long as the principle operates.

The pathetic REIT investor can now also take advantage of the opportunity and buy a decent, decentralized, excellent “yield” and “hard asset” category during this correction. Central banks are “liquidity money” and have to react to rising long-term interest rates like Japan. The more the QE (monetary policy revitalization) the more the world moves, the liquidity of capital that is seeking returns. Real estate market yield levels are very high at this level (excluding some prime CBD markets). I would still like to see that the real estate market is the most interesting asset class of all options, especially if it can be purchased in a decentralized and liquidated manner, for example, through a smartly diversified REIT fund portfolio.

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