Rising Bond Yields Lead To Slowing Real Estate Gains
Property investors are losing their appetite for risk in the face of an expected rate hike from the Fed and uncertainty on global economic expansion.
A narrowing divide between US corporate debt yields and returns on properties is leading to lagging price appreciation and pointing to the potential for an additional slide in real estate prices, Bloomberg reports.
Corporate debt yields touched a three-year high last month, a sign the Fed may have been on to something in October when it indicated commercial real estate prices could be showing signs of overheating.
All signs are pointing to the first rate hike in a decade, including last week’s stable jobs report. The move could lead to further correction in the markets and continue to dampen the enthusiasm of commercial real estate investors. [Bloomberg]