Last week I attended a Strategic Partners Conference in California hosted by Time Equities, a large privately held Real Estate company based in New York. They are Antrev’s longest standing and highly valued client. The conference dealt with current issues facing real estate development and focussed on upcoming world trends and what their effects will be on our business.
Once getting past the mind numbing profits that their company had made in some of TEI’s New York based acquisitions over the previous few years, the focus of the meeting centered on the topic of present day financial markets. General sentiment is that cheap and easily accessible money from traditional lenders will remain the order of the day for the foreseeable future. Low interest rates will continue to result in increased prices for properties. Large institutions such as pension funds and insurance companies and Real Estate Investment Trusts (REITs) have an insatiable appetite to place funds, with huge amounts of capital at the ready. Traditional investment vehicles such as Municipal Bonds, GIC’s, money market funds, etc. are providing such a pathetic interest rate that the risk tolerance has been increased to allow for participation in what used to be called ‘alternative investment strategies’, i.e. Real Estate. The number of dollars chasing each deal has resulted in a field day of opportunity for vendors.
Next episode will deal with the influx of money from exterior sources which are further intensifying purchase prices.