A quick look at the newspaper headlines will quickly raise alarm bells for real estateinvestors. The United States is likely to experience little or no economic growth in 2008, the global economy looks to be entering at least a slowdown and indicators point to a period of deleveraging. Such factors will likely affect the global real estate market. But it is important to distinguish between the U.S. subprime residential real estate crisis and the prospects for the wider, mostly commercial, real estate market globally.

The subprime real estate crisis was a consequence of illiquidity in aggressively underwritten and priced securities backed by mortgages made to subprime borrowers. The wider global real estate market is subject to the forces of supply and demand, and its performance is the result of how these forces play out on the occupier, investor and developer markets across each individual real estate market.

SHORT-TERM PRESSURES