The Biggest Threat to Investors
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Investors, looking for better returns than they can get on a treasury or corporate bond, are still rushing into real estate.
ATLANTA—Competition for good deals is strong, helped by devaluation of currencies overseas. Investors, looking for better returns than they can get on a treasury or corporate bond, are rushing into real estate.
What will result from these market dynamics? That’s what we asked KC Conway, credit risk manager and chief valuation officer at SunTrust Bank.
Typically, Conway told us, too much capital chasing too few deals increases prices to unsustainable levels that eventually return to historic norms. While the strengthening US dollar and declining value of foreign currencies—such as the Euro—are good for US commercial real estate demand and property values, he adds, they are putting downward pressure on cap rates and increasing property values at a pace that will eventually slow or unwind…
