- December 1, 2010 Vol. 4 No. 11

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For Lessons, See History: Investors in European Real Estate Are Looking to the Past for Guidance on How to Adjust to the New Reality

by Sabina Kalyan

2008 was the year of the Banking Collapse. 2009 was the year of the Great Recession. 2010 was the year of the Government-Sponsored Recovery. 2011 is likely to be the year of Facing Consequences.

This might seem to be an odd statement to make, given that those of us in real estate have already had to face severe consequences from the bursting of the real estate bubble — rising cap rates, falling rental values, loans in breach and a scarcity of finance. And in the wider economy, with unemployment rising sharply and home equity falling, times have not been easy. However, it is my contention that we are only just starting to face up to the fall-out from the global financial crisis — that 2009 and 2010 were essentially the years when policy-makers pulled out all the stops to prevent another Great Depression. They succeeded, but the mess of incorrectly valued real estate, non-performing loans and economic structural adjustment has yet to be worked out.

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