IREI: Roundtable discussions with investors on US recession risks, investing in data centres in Asia
This past December, two virtual roundtables with institutional investors, consultants and investment managers held by Institutional Real Estate, Inc addressed US recession risks as well as investing in data centres in Asia. The in-depth discussions were moderated by Reno Sio, managing director, Asia Pacific, at IREI.
In the first roundtable, participants tackled the property market implications of a US recession as the Fed raises interest rates to tame inflation. Key takeaways include the following:
Expect writedowns for US real estate
Three macro challenges make it nearly impossible for US real estate to escape writedowns in the next few quarters:Debt: All-in debt rates are somewhere in the 6 to 7 percent range. This makes it nearly impossible for cap rates to remain low. The relative value proposition: If you assume a long-term, stabilised 10-year Treasury of 3.25 to 3.50 percent, that