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Austin, Texas George Rose/Getty Images
Austin is among the secondary markets that Middle Eastern investors are looking at more.

Seven Must Reads for Real Estate Investors Today (April 11, 2023)

Foreign investors are pausing activity and refocusing on less traditional real estate sectors amid economic uncertainty, reports Commercial Observer. Mortgage Professional America asks whether real estate remains a good investment choice in an inflationary environment. These are among today’s must reads from around the commercial real estate industry.

  1. Auditors Didn’t Flag Risks Building Up in Banks “Auditors are required to record any critical audit matters when they sign off on a public company’s books. Regulators define these as matters that have a significant impact on the financial statements and involve ‘especially challenging, subjective or complex’ judgments by the auditors. Silicon Valley Bank’s unrealized losses in its bond portfolio appear to ‘meet every definition of a possible critical audit matter,’ said Martin Baumann, a former chief auditor at the PCAOB who had a leading role in designing the new measure.” (The Wall Street Journal)
  2. Middle Eastern Commercial Real Estate Investors Shift Focus “In today’s market, visions of Middle Eastern buyers acquiring multibillion-dollar Manhattan high-rises and trophy assets in other coastal cities may be a bit of a mirage. Even the uber-wealthy sovereign wealth funds from that part of the world have become more measured during a period of rising interest rates and economic uncertainty, pausing some activities, focusing on different sectors and secondary markets, and generally trying to wait out the malaise in the market.” (Commercial Observer)
  3. Is Commercial Real Estate a Good Investment Amid Inflation? “Given economic uncertainties amid inflation, it’s often difficult to assess the state of the markets. In times like this, one turns to experts to provide an outlook. To that end, Mortgage Professional America sought insight from Ian Formigle (pictured), chief investment officer at CrowdStreet, one of the largest online CRE investing platforms. He spoke to MPA after a year that saw private investors as the most active buyers of commercial properties.” (Mortgage Professional America)
  4. A Few Comments on Commercial Real Estate “The focus of this newsletter is residential real estate, although I follow several commercial real estate (CRE) sectors on my blog. There have been numerous warnings recently about a potential CRE lending crisis and I’d like to add a few comments. First, when most people think “CRE” they think office and retail space. The concern for retail is online shopping eroding in-store buying (a long-term trend), and work-from-home (WFH) reducing the need for office space (another long-term trend that increased sharply during the pandemic but has reversed recently).” (CalculatedRisk)
  5. Senior Housing Occupancy Rates Continue to Climb “Senior housing occupancy rates have increased for the seventh consecutive quarter, according to a report by the National Investment Center for Seniors Housing & Care, which utilized data from NIC MAP Vision. Occupancy rates for the first quarter of 2023 were 83.2 percent, a 30 percent increase from the fourth quarter of 2022’s 82.9 percent occupancy rate. Of the 31 metropolitan areas covered in the NIC MAP Vision’s data, Boston had the highest senior housing occupancy rate at the end of the first quarter of 2023 at 89.1 percent.” (Multi-Housing News)
  6. High Demand for Upscale Hospitality Real Estate Despite Inflation “Despite a down economy and rising interest rates, a few bright spots remain within the luxury real estate and travel industries. Sales of high-ed branded hotel residences are continuing to spike with buyers more than willing to shell out an average 30% premium for these hotel-affiliated homes.” (Forbes)
  7. Depressed NYC Real Estate Prices Yield Bonanza for Savvy Investors “Select asset classes in New York City’s commercial real estate market are experiencing a decline in prices – reaching levels last seen in 2009, according to a new report. And yet, the scenario offers a “once-in-a-generation opening” for investors to capitalize on normally unattainable properties, according to the findings. Given the report’s vein, the title – “From Fear to Fortune” – is apt. The rest of the title is clunkier, but better explains its premise: ‘General Investment Opportunities in New York City Commercial Real Estate After the COVID-19 Pandemic.’” (Mortgage Professional America)
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