Global property prices to ‘bottom out by 2010’
Dubai, August 11, 2009
It will be 2010 before real estate prices bottom out but the world will only fully recover from recession when the US is out of the red, says Donald Trump Junior, executive vice president of US-based Trump Organization.
Trump Jr, the son of famed property developer Donald Trump, will deliver a keynote presentation at Cityscape Dubai 2009, a major business-to-business real estate event set to take place from October 5 to 8 at the Dubai International Convention and Exhibition Centre.
He will address a wide range of real estate issues including his forecast for recovery and the existing market opportunities.
“Due to the persistent buy-sell gap, the unwillingness of banks to foreclose and the complexity of workouts - I would say that it will be sometime in 2010 before we get the sense that we have bottomed out,” said Trump.
Giving a preview of his Cityscape Dubai address, Trump said that on worldwide recession that although some markets such as China may recover sooner, “a consensus will be reached on the state of the world economy and its recovery once the US is out of the red.”
He added: “I do see emerging countries recovering more quickly because fundamental demand in so many of these countries is still very strong…Mumbai has seen the average rental and capital values for luxury apartments decline in the range of only 4 to 12 per cent year over year.”
“This is a show of resilience, and the entry level to middle income housing market in India is even stronger. Total retail sales in Beijing are expected to grow by 13% year over year by the end of 2009 – a remarkable performance for a sector that has been comparatively decimated in the US,” he added.
Asked how long he thinks it will take for property values to return to their peaks of late 2007/early 2008, Trump said not until 2017 for commercial office real estate in the US and hospitality values by 2015.
He warned that for the west: “There is more pain to come and real estate will not recover without liquidity and job growth. But both will recover in time and with them real estate prices.”
He nevertheless continues to see real estate investment continuing to appeal.
“Real estate is a solid, long-term hold in a portfolio; it is a secure investment provided the right people are involved,” Trump said. “In addition, should increased government spending trigger an inflationary environment, investors will be looking for shelter in hard assets.”
In that respect Trump identified the assets that interest the Trump organization as hotel, residential, mixed use and golf asset classes in both international and domestic locations.
“In this environment we have explored acquiring or taking a position in key assets from distressed parties, partnering with banks to complete or reposition foreclosed assets, acquiring divested assets from bank reorganisations and partnering with ‘local’ developers,” concluded Trump.
Cityscape Dubai takes place against the backdrop of the foundations of the real estate world buffeted by economic turmoil. Indeed the Trump Organization has also experienced the regional fall out from the global downturn at first hand, with the suspension of Trump International Hotel and Tower on the trunk of the Palm Jumeirah.
“As such, we anticipate reduced participation figures in 2009 compared with previous years, but the event remains the largest business-to-business real estate platform in the world with the greatest regional influence – speculator free and back to our roots,” said Chris Speller, Cityscape Group director. – TradeArabia News Service