State of the State 2016: Heidi Learner of Savills Studley

Heidi Learner, Savills-Studley

What lies ahead for the global economy?

Fortunately or unfortunately, more of the same.  Low rates are here to stay.  Even if we see a rate hike from the Fed this December, three of the world’s other central banks–the ECB, the Bank of Japan and the Bank of England–are all still continuing their asset purchase programs, which have had the effect of keeping government rates at historical lows. With investors (particularly insurers and pension funds) desperate for yield, cap rates in the US at 4% look quite attractive–even if we can’t count on sustained increases in net operating income over the long term. 

US real estate markets have been reliant on foreign sources of capital–particularly from China–and one of the risks for US markets is that a hard landing in China’s debt-fueled economy will stem capital flows to the US precisely as the US begins to slow–7+ years into the recovery.  Stay tuned.

Heidi Learner is the chief economist at Savills Studley