As investment dollars pour into real estate, are risks understood?

Is all that money pouring into real estate from places like China and the Middle East smart money or dumb?

Although dumb might not be the best way to describe investors who are snatching up properties in North America, Europe, Asia and Australia as if financial crashes are once-in-a-lifetime events, a new report by property data analytics firm IPD/MSCI warns that many don’t appreciate the complexity of real estate as an asset class or the limitations of benchmarking data, the Financial Times reports.

Demand for property has investors willing to take bigger risks — putting money into development, for example, because there’s a shortage of property for sale, said IPD Managing Director Peter Hobbs.

Hobbs said investors putting money into real estate in other countries may not have a sufficiently sophisticated understanding of the markets they are investing in, and that even large, sophisticated companies are using the wrong models to assess risk.

It goes without saying that IPD stands ready to provide property data and risk analysis to help investors steer clear of bad investments. Source: ft.com.


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