Publications

- July 1, 2011: Vol. 5, Number 7

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Here Comes Trouble, Again: Why Real Estate Is Increasingly Viewed as the Achilles

by David Neil and Philip Bjork

In a recent article in the Financial Times*, John Plender addresses two developments that are very relevant, and troubling, for the real estate investment industry. Firstly, financial crises have become increasingly common. Secondly, real estate is generally playing an increased role in crises over time.

The real estate investment industry has reason to take these two developments seriously. If real estate is recognised as a volatile asset class and increasingly is viewed as the Achilles’ heel of the financial system, a number of detrimental effects could follow, from lower investor appetite to tougher regulation. There could also be calls for revised investment strategies.

CRISES ABOUND

Who can name a financial crisis that took place between 1933 and 1972? Most people cannot. This is not particularly surprising, as most experts seem to agree that there was not a market disruption during

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