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- January 1, 2013: Vol. 5, Number 1

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Leveraging Up: Caution Still Prevails in the Use of Debt Since the Global Financial Crisis

by Benjamin Cole

1 Today's investment world is in some respects a snapshot of contradictions: record low interest rates with lots of capital on the sidelines; Asian economies are still growing, but real estate prices are tame; central banks stimulate but raise regulatory requirements on banks. Although this new world still presents opportunities for investment, many institutional real estate investors still preach prudence and practice caution on the use of leverage in their investments. In the lengthening post–World War II era, capital has never been so cheap, yet commercial property values worldwide still sag from the 2008 real estate bust. Asia (ex-Japan) is broadly tabbed as a relative economic bright spot, certainly compared with economic contractions reported in Europe and Japan. Reservoirs of capital greater than the world has ever known await release onto global and Asian asset markets — perhaps real estate foremost — pending any set of economic signal

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