Summary of Understanding the Commercial Real Estate Investment Ecosystem

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Rating

8

Qualities

  • Innovative
  • Overview

Recommendation

Commercial real estate is a critical part of an economy, and shifts in its valuations can have outsized impacts on business cycles. The World Economic Forum has created an early warning system to predict declines in the prices of commercial properties in 10 US cities. The model, once rolled out to more markets and assets, could help participants better manage their investments and mitigate losses associated with a downturn. This informative report provides a good overview of the drivers of the US commercial property market. getAbstract recommends this detailed description of an innovative forecasting tool to policy makers and real estate investors.

About the Author

The World Economic Forum is an independent global organization that engages leaders of business, politics, academia and society to improve the state of the world.

 

Summary

Commercial real estate – “a devilishly complicated mix of heterogeneous assets, fragmentation, conflicts of interests, diverse metrics and an increasingly global investor pool” – is an asset class subject to steep price fluctuations. The market also lacks consistent information necessary for informed decision making. Upheavals in commercial real estate have consequences both for investors and for the broader economy. Experts recognize a serious market correction as “a greater than 20% drop in value…over a two-year time frame.” With US commercial real estate...


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