Have We Hit Bottom Yet?

Slowly advancing first-quarter sales may not make this the right time to pop the champagne corks-though it does represent a plateau compared with the previous quarter and suggests that the bottom may be in sight.  This update comes from Real Capital Analytics (RCA), which warns that “there is no recovery in sight”.

In its June Global Capital Trends, RCA notes that property sales in the Americas totaled an estimated $8 billion during the second quarter, down just six percent from the first quarter, an 83 percent drop compared with last year.  Second-quarter totals for EMEA markets are down 24 percent from the first quarter to just $17.3 billion, a 71 percent drop from 2008.  The good news is in the Asia Pacific markets, where RCA projects an 18 percent gain over the first quarter with a total of $23.3 billion in sales, approximately half of the second-quarter worldwide numbers.

According to Robert M. White, Jr., RCA’s founder and president, “We’re probably at the bottom “in terms of transaction activity.  Globally, the upturn will be sporadic.  “If anything, the downturn was correlated more closely across property rates and geographic regions than the recovery will be.  Activity in Europe is growing, especially in the U.K.  And there is a buzz in the U.S., too.  In the past few weeks, we’ve seen more and larger deals.  I wouldn’t say it’s a quick rebound, but frankly I don’t think volume could sink any lower in the U.S.”

Pricing may be a different story, White cautions.  “We may already be there, but none of it will be realized until these distressed deals close.  We can look forward to move activity” in the fall and through year’s end.