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Property EU Says: American ‘Realist’ Reggie Middleton Paints a Sombre Picture for European Real Estate Amid Fears of Stagflation
Yesterday, I bluntly called out the European state of economic affairs as I saw them in “Liar, Liar, European Pants on Fire!” Today, I present the article published by Property EU,
one of the leading real estate publications in Europe which illustrates
much of my thoughts on the topic of how and why Europe is nowhere near
out of its economic malaise, and more importantly how this may pull the
value of real estate down. The vast majority of European banks lend
against real estate and when the value of said collateral goes down in
conjunction with the value of what many are carrying on their books at
par as risk free and hold to maturity assets at 30+x leverage… Well, you
can use your imagination for the Lehman like results…
Click any graphic to enlarge. Press play on the videos to view clips
of the original presentation of my keynote speech at the ING valuation
conference in Amsterdam last month.
This week I will go through several property devaluation scenarios
as applied to what looks like very promising cash flow scenarios using
real life examples of NYC commercial real estate starting tomorrow, and
culminating with a more in depth analysis for subscribers next week. The
most interesting part of the analysis will be the application of our
real asset protection program to hedge against the risk of property
value decline. Stay tuned, it should be exciting, and if you are not a
finance nerd like me – at the very least interesting…
Those who wish to download the full article in PDF format can do so here: Reggie Middleton on Stagflation, Sovereign Debt and the Potential for bank Failure at the ING ACADEMY-v2.
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Negative population growth in much of the developed world through 2050 means that residential real estate prices will have a long term negative trend.
For example, the Population Research Bureau predicts (pdf) that Japan’s population, now around 127 million, will shrink to roughly 95 million by 2050. This is due to the aged population with below replacement fertility. Assuming a household size of 3 persons, this would amount to a reduction in housing unit requirements of roughly 10 million units, or about 250,000 units per year between now and 2050.
Other countries with significant population loss to 2050 forecast by the PRB include:
Germany – decline from 82 million residents to 72 million residents
Russia – decline from 142 million residents to 127 million residents
Ukraine – decline from 46 million residents to 35 million residents
Poland – decline from 38 million residents to 32 million residents
Many other countries in East Asia and Europe are forecast to have roughly zero population growth during this time frame. This suggests that in these areas real estate will be at best a non-factor in GDP growth.
USA! USA! USA!
We are in the sweet spot. Population growth almost as fast as the third world with a lifestyle of the first world.
If you dont like europe's demographic then invest in the USA.
Hey Reggie,
why don't you telly us more about how Metlife and Tishman-Speyer were ripping off tenants in Stuyvesant Town / Cooper Village by charging them market rate rents while getting real estate tax rebates at the same time ?
Or why don't you tell us how the tenants' buyout offer initially wasn't even deemed worth looking at by Metlife.
No, they preferred the locusts of Tishman and Blackrock instead.
The same Black Rock, whose Larry Fink says, that markets like dictatorial regimes.
So much for Krony Kapitalism in N.Y.C. .
If I have a building to sell do you think i would prefer to sell to a group of people of dubious credit that probably need to find financing or expect me to finance them?
Or will i sell to blackrock instead who already has financing lined up and could close the same day a deal is struck.
I wouldnt waste my time either with a bunch of naive amateurs.
Reggie! Reggie! Reggie!--> Reggie Middleton, American Realist...In the words of Wiley Coyote - I like the way that sounds....Reggie Middleton, American Realist....Keep up the great work Reggie, but, be careful as you approach Portugal they are a little 'sensitive' about their financial position...just sayin'
The 10 trillion stagnation. All the money pumped in gave the illusion of prosperity and has propped up property somewhat. Everyone's waiting for things to return "to normal", in Spain, Uk, Ireland etc. No chance.
Yes If China and ME barons pour ALL their surplus wealth into EU and USA to prime the pump of DC growth by effacing all debt. What a pipe dream...or world war!
RM : you should get JCT to answer you personally on this and on Liar,liar..you're a no flyer...theme song. That would be sooooooooooo amusing to see him run political rings around your turnstiles...what a game of sham machiavellian spiel makers.
You da man.
Keep up the good work, but dont be a stopped clock. Call the turn also. We probably have a couple of years.