It’s always the same. For whatever reason, usually to do with human activity and greed and avarice, a bubble forms. As more people find out about what can always only be a false promise of lasting wealth emanating from the bubble and try to get in, the bubble stretches and gets bigger and bigger. Eventually, the bubble can stand it no longer and bursts under the pressure, spilling contents asunder. It is not only the bubble that is deflated; the expectations of the occupants of the bubble, based on that false promise of wealth, are also deflated.
From the Current Issue
Institutional real estate investors could be excused for feeling battered and bruised after the experiences of the past two years and for being nervous over what the future may bring. We believe, however, that natural caution should not stand in the way of what are likely to be great investment opportunities in 2010, both continuing in the United Kingdom and as continental European markets near a key turning point.
German insurance companies represent some of the largest institutional investors in Germany. A recent survey conducted by Ernst & Young revealed that the majority of the questioned German insurance companies planned to raise their real estate quota on average to approximately 6.3 percent by the end of 2009.
The WPV — the Versorgungs-werk der Wirtschaftsprüfer und der vereidigten Buchprüfer, which translates as the Superannuation Fund for Auditors and Certified Accountants — was established as a pension scheme for these professions in 1993 by legislation passed by the federal German state of North Rhine-Westphalia.
If there remained any adherents to the efficient market hypothesis, the recent events surrounding Dubai World should finally kill off such dated views. It can hardly be considered surprising that an entity that has in excess of $26 billion (Ä18 billion) of debt — much of it real estate–related — would eventually face some form of distress.
Dubai’s fall from grace has been quick, yet not unexpected. Over the past few years, as ski slopes were constructed in the desert, islands created and taller and taller structures built, commentators questioned the sustainability of the Emirate’s economic growth.