An almost universal real estate investor assumption today giveseveryone some comfort that values won't fall too precipitously.That assumption is there is somewhere in the neighborhood of $300billion in equity capital waiting on the sidelines to snap upbargains and keep a floor on pricing. This money includes sovereignwealth funds, pension fund dollars committed to opportunity funds,foreign institutional monies as well as high net worth capital.
Someone very wise and close to me always pounded into my head"don't make assumptions." So let's examine several counterpointsthat may chip away this cushion.
First of all we have the return of the denominator effect. Thebear market has reduced stock values and increased the percentageof real estate in overall pension portfolios. That means manypension plan sponsors will look to reduce property holdings or atleast hold off on new real estate investments until theirportfolios have been re-balanced to meet their asset modeltargets.
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