In an article published on The Wall Street Journal, it was said that Investors are pushing commercial real-estate prices to record levels in cities around the world, raising concerns that the global property market is very hot.
The assessments of commercial buildings sold, on a price per square foot basis, in big cities like London, Hong Kong, Osaka and Chicago hit its highest record in the second quarter of this year. Meanwhile, in cities like New York, Los Angeles, Berlin and Sydney, the valuation office building sold reached their highest since according to industry tracker Real Capital Analytics.
Big U.S. investors have bulked up their real-estate holdings, just as buyers from Asia and the Middle East have become more regular fixtures in the market.
Because of low interest rates and an influx of cash in the economy caused by the central banks, investment in commercial real estate now appears more attractive compared to bonds and other assets. Furthermore, it isn't only the U.S. investors that are investing on commercial estate but buyers from Asia and the Middle East are also becoming regulars in the commercial real estate market.
Furthermore the article has mentioned about how analysts feel about this fast growing rates in the commercial real estate market. This growth which started in 2010 has gone considerably strong that many analysts are concerned of its potential troublesome rate. Jacques Gordon, head of research and strategy at Chicago-based LaSalle Investment Management says, "We're calling it a late-cycle market now." It may not be time to panic yet but Mr. Gordon quotes, "if too much capital comes into any asset class, generally not-so-good things tend to follow."
WSJ also mentioned that Regulators are watching the market closely and reports that the Federal Reserve pointed out, in its semiannual report to Congress last month that "valuation pressures in commercial real estate are rising as commercial property prices continue to increase rapidly."
