Real Estate

Almost every asset class has seen sharp correction over the past few weeks, be it stocks, commodities, currency like the dollar, even Art has seen some softening in resale prices, but real estate prices have so far remained over heated in most commercial parts of the world. Even residential property rates in the emerging markets like India, China, Taiwan are over heated. Continued over heated prices is a cause of concern for business as well as genuine home seekers.
Huge money flows have gone into real estate segment, be it PE funds, massive loans from financial institutions and banks to builders and home buyers, black money has also flown with great intensity in to this area. Rentals are also ruling high making the business operations and other commercial activity less profitable or even viable to run. This has caused inflationary pressures in the final product prices. This real estate segment has to undergo a major price correction in order to restore affordability and investment viable proposition.

Global Liquidity And Financial Markets

Every asset class one can imagine is going through a massive bull phase un-seen in the history of financial markets. Whether it be Stocks, Bonds, Commodities, Real Estate, Art, Mortgage market. Never before we had a secular bull run in all these asset classes at the same time.

Huge liquidity (money) unleashed by central banks across the world has been fuelling this asset price inflation for the past 4 years and its in the interest of wealth managers, portfolio managers, investment advisors, financial planners to continue advising wealthy individuals/corporates to keep pouring money in these assets in order to out-perform or out-do each other. These individual/corporates also desire to out-do each other and hence raising their risk appetite in order to achieve more returns and hence take more risks in the form of leveraged by-outs/take overs as shown by some large PE funds.
Also they leverage in financial markets across the world in order to gain large profits and hence open the window for disaster if someting goes wrong in terms of rise in interest rates, big fluctuation in cheap to borrow currencies like Yen, an epidemic spread likes of bird-flu across a continent like europe, major terriorism attack on developed countries, sharp increase in crude oil prices.
Any adverse event can thus poses great risk to investors/traders financial health.