Commercial Real Estate Expensive, But Some Investors See Opportunity

Bloomberg writer Wes Goodman reported on Monday that, “Federal Reserve officials say U.S. commercial real estate is expensive. That isn’t stopping the world’s biggest money manager from saying it’s time to buy.

“BlackRock Inc. says property can deliver average yields of 3.5 percent, compared with 3.4 percent for U.S. investment-grade bonds and the S&P 500 Index’s dividend yield of 2 percent. Demand is spreading as far as Asia, where Mirae Asset Securities Co. is buying U.S. real estate, including some of the Seattle buildings that house Inc.”

The Bloomberg article noted that, “Property prices have risen enough that Fed Chair Janet Yellen is taking note. Commercial real estate is ‘high,’ she said in January.”

Mr. Goodman added that, “Fed rate hikes are a sign of improving economic growth that will support property prices, said Park Sungjin, the head of principal investment in Seoul at Mirae Asset Securities, which oversees $8 billion. Last year, his company also bought the buildings that house State Farm Life Insurance Co. in Texas, Park said.”

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