IPD: Real Estate Slump Receding

The Investment Property Databank's U.S. Quarterly Property Index shows that commercial real estate markets have emerged from a two and a half year slump.

August 24, 2010
By Allison Landa, News Editor

There’s light at the end of the tunnel for real estate investors. That’s according to the Investment Property Databank, whose U.S. Quarterly Property Index shows that commercial real estate markets have emerged from a two and a half year slump.

Underlying U.S. commercial real estate markets showed a quarterly positive capital return of 2.2 percent, which contributed to a 4 percent total return. The Index measures $77.3 billion in properties in predominantly core open-ended funds.

According to IPD North America managing director Simon Fairchild, the capital flowing into United States real estate is risk-averse and chases prime stock that owners are not seeking to sell. He noted that the market is showing mixed signals, with some funds enjoying substantial cash inflows while others are not seeing such encouraging results.

He added that while the range of returns posted by core funds has narrowed, the spread is still historically high. That’s due to varying degrees of leverage, he said, as well as a preponderance of write-downs in value throughout the downturn.