The United States of America is witnessing a major slump in the commercial real estate market and by the end of the year 2019; most of the major investors in the office space and commercial buildings have now turned into the net sellers of the same property in the past few years.
Hunter Coates III, one of the most familiar names in the US real estate markets, quoted that ‘Even though these investors are still putting their money to purchase these assets, they clearly sold more than they bought in the recent times”.
If we look into the recent reports in the same regards, direct acquisitions amounted to around $21.3 billion in the first half of the year, which is lowered by almost 40% in comparison to the last years same time. Surprisingly, the net sales in the same sector have reached around $21.4 billion.
Well, there is no single region that can be deemed responsible for this pullback and even china has slumped down to no.9 in the list of investors. This can majorly be accredited to the strict capital outflow rules in China which have resulted in the downgrading of their position to 7th in 2018, as compared to 3rd in 2017.
That said; let’s take a look at some of the major reasons behind this ongoing global economic slowdown in the real estate sector.
- Lack of faith amongst the potential buyers
The real estate sector is currently struggling with the lack of faith amongst the potential buyers and this can be due to the heavily delayed process of allotments in most of the commercial projects around. The buyers are a bit hesitated to pool their money in the market and this can also be blamed for the projects which have been halted for so long in recent times.
- The global economic slowdown
The world is currently going through a severe economic slowdown and the situation has further worsened with the emergence of issues like unemployment and rising job insecurity. This is where people are saving more and conserving all the money to cope up with the same situation and avoiding any kind of future purchase of commercial properties around.
- High anticipation for a future price correction
Most of the buyers are waiting for the commercial property prices to hit the biggest low and this is where they are waiting for the meantime and not making any other future investment. Well, this is something that has resulted in a massive downturn in the real estate market and made the situation a bit complicated for the sellers at the same time.