Real Estate with Tim Sharkey 

Is Now the Time to Buy?

March 18, 2024
Tim Sharkey, Founder - Sharkey Real Estate

Jon Gray, President of Blackstone Group, has made a compelling case for investing in real estate now, highlighting that property prices have reached their lowest point and are poised for a rebound. In a Bloomberg interview released on Thursday, Gray emphasized the risk of missing out on prime investment opportunities due to excessive caution. He pointed out that the anticipation of interest rate reductions should motivate investors to act swiftly. "The perception is overwhelmingly negative, and the headlines echo this sentiment, yet the decrease in value has already taken place," he observed.

Gray clarified that he doesn't foresee an immediate sharp recovery but believes that the current period, where the market is bottoming out, is the ideal time for investors to make their move. According to him, the reluctance among investors stems from an overabundance of caution, yet the window for taking advantage of lower prices before they begin to rise is narrowing.

Speaking from Rome at the Bank of America Global Investor Summit, Gray outlined the significant challenges that have beset the real estate market, including the shift towards remote work impacting the office sector and the rise in interest rates which have increased the cost of capital and decreased real estate valuations.
Despite these challenges, Gray encourages investors to look beyond the gloomy headlines and seize the opportunities that emerge as central banks globally prepare to lower interest rates. He notes that with the cost of capital decreasing, credit spreads tightening, and a significant reduction in new construction, there are attractive investment prospects in sectors such as logistics, driven by e-commerce, digital infrastructure, student housing, and hospitality.

Gray also addressed concerns about potential major financial losses within some institutions due to the real estate downturn, reassuring that these issues are unlikely to affect the sector as a whole. "I don't believe we're facing a situation on the scale of the 2008-09 financial crisis, though there will certainly be some instances of distress," he stated.

However, he cautioned that there's a risk of a deeper slump in the housing market if central banks delay interest rate cuts more than anticipated, after already being slow to respond. This nuanced perspective from a leading figure in asset management underscores the timing and strategic considerations essential for real estate investment in the current economic climate.