2. Top 10 Predictions for 2012
1. Eurozone Headed For a Second Dip
Austerity will be the name of the
game, with tight bank credit and
plummeting confidence.
• Eurozone GDP will (at best)
contract by 0.7% in 2012
•UK might be able to eke out
0.3% growth
Prediction made by: Nariman Behravesh, Chief Economist, IHS
3. Top 10 Predictions for 2012
2. U.S. GDP Will Grow by 1.5% ‐ 2%
•EU austerity will reduce demand for
American goods
•US would require job growth of over
2k per month to beat 2% GDP growth
– an unlikely event
•Govt spending at all levels will
decline
•Construction (with the exception of
apartments) will remain in the
doldrums
Prediction made by: KC Conway, Executive Managing Director, Market Analytics
4. Top 10 Predictions for 2012
3. Interest Rates will Remain Low
•Interest rates will remain historically
low, artificially buoying asking prices.
•However, appraisal, underwriting
and lending will keep prices flat.
Prediction made by: Douglas Garcia, Director, Research, Northern California & Nevada
5. Top 10 Predictions for 2012
4. Taxes will Rise
•Federal, state and local legislatures
will expand their creativity for
balancing budgets and request
additional funds.
Prediction made by: Douglas Garcia, Director, Research, Northern California & Nevada
6. Top 10 Predictions for 2012
5. Food Prices Will Drop
•Food prices will drop, following the
expiration of the $6B federal ethanol
subsidies, as corn and other agricultural
prices reset to market levels.
Prediction made by: Douglas Garcia, Director, Research, Northern California & Nevada
7. Top 10 Predictions for 2012
6. Residential Property Values Will Remain Stagnant
• National home prices have been
dropping less sharply since 2008,
but haven’t bottomed out yet.
• National home prices will decline
another 3-5% and finally bottom out
in 2012
Chart Source: Zillow
Prediction made by: Sean O’Neill, Research Director, Baltimore
KC Conway, Executive Managing Director, Market Analytics
8. Top 10 Predictions for 2012
7.Warehouse Will Be the New Star Performer
• There is less distressed warehouse debt
than other property types.
•The least amount of new construction
still underway among the major CRE
property types.
•Has yet to see major cap rate
compression. Cap rates are still above
6% for even Class A in core port markets.
Prediction made by: KC Conway, Executive Managing Director, Market Analytics
9. Top 10 Predictions for 2012
8. Hotel Revenues Will Rise
• U.S. hotel revenues will grow 6.1
percent in 2012, the result of a 1.3
percent rise in the number of
occupied rooms and a 4.7 percent
increase in average daily room
rates.
Prediction made by: Robert Mandelbaum, Director of Research Information Services, PKF Hospitality Research
10. Top 10 Predictions for 2012
9. Investment Volume to Grow by 50%
• Investment sales will hit $300 billion in
2012.
• Lenders have $160 billion in distressed
commercial loans that need resolving.
• REITs raised a record $37.5 billion in 2011
Chart Source: Real Capital Analytics
Prediction made by: Real Capital Analytics
11. Top 10 Predictions for 2012
10. Most Cap Rate Compression Will End
• Cap rate compression has run its course
for all but Warehouse. Cap rates will rise
in 2012 as the volume of assets coming to
market from failed CRE refinancings, EU
asset sales, and US failure to gets its
fiscal house in order.
Chart Source: Real Capital Analytics
Prediction made by: KC Conway, Executive Managing Director, Market Analytics
12. EconoFocus
James Cook
U.S. Director of Research
james.cook@colliers.com
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