Global Market Has Effect on Florida Real Estate
Kenneth P. Riggs Jr., CEO of the Real Estate Research Corp., delivered a speech at the Central Florida Commercial Real Estate Society and Orlando Business Journal 2nd Annual 
2006 Real Estate Outlook luncheon with one important message in mind:
This is a global marketplace.
The state of the ecomony around the globe has an impact on Florida home loans, as the industry faces global imbalances in savings, investment and consumption that all asset classes are vulnerable to, Riggs said.
Other points that Riggs made included the following: In the wake of Hurricane Katrina, the U.S. economy remained strong and it will continue to do so through the rest of this year. Stronger business spending and government fiscal stimulus as post-hurricane reconstruction gets under way will offset a slowdown in consumer spending.
Moreover …
- All commercial real estate segments remain strong.
- The office sector is recovering with increased demand and limited new construction.
- Retail has strong investment, thanks to consumer spending, low interest rates and improving personal income and job growth.
- The industrial sector continues to improve.
- Apartment rental rates are increasing as vacancies decline.
- Hotel properties are projected to outperform other property types over the next few years, thanks to increasing room rates and business travel.
Further, low long-term interest rates contributed to high levels of housing activity, boosting homeowners’ wealth and personal consumption despite high energy prices, increasing vulnerability of the U.S. economy and a housing slowdown.
Finally, despite a cooling in the U.S. housing market, look for regional corrections as opposed to a national collapse in home values, he said.
Over time, capitalism will correct these imbalances. However, Riggs said that expectations on the investment side remain too high, which lowers the margin for investor error. Instead of expecting total returns in the teens, investors should expect 8-10 percent instead, he said.
“We can’t get ahead of ourselves,” Riggs told Orlando Business Journal. “We need to lower expectations on the return side.”
