When the research includes hotel and other hospitality-oriented real estate the drop was only 0.5%, according to the 141 firms included in the survey. The report goes on to predict that 14% of investors will accelerate investments to lock in attractive yields and two-thirds say it is "business as usual."
The survey, conducted in Dec. of 2001, 90 days after the terrorist attack on America took place, addresses the concerns about the attractiveness of American property and shows they are overblown.
Not surprisingly, the hospitality sector was the most affected by the events of Sept. 11. Those surveyed expected that sector to see a 5% drop in values as a result of the recession and terrorist activity.
On the down side, real estate investors in the survey expected to see property casualty insurance rates climb 138% in 2002, while 49% of those surveyed feel security costs will increase substantially in 2002.
The good news: A substantial percentage of those surveyed intend to increase their real estate investments in 2002. According to the survey, 14% of real estate investors plan to accelerate their investment activities to take advantage of the wider leveraged spreads in the debt markets, which widened by approximately 20 basis points in the 90 days after the September terrorist attacks.
Almost two-thirds of the real estate investors surveyed by Integra (64.3%) said the attacks would have no effect on their real estate investment plans, while 16.3% said they were taking a "wait and see" approach.
In a separate survey released in Dec., foreign investors in real estate also reinforced their belief in the growth potential of U.S. real estate. Foreign investors in an Association of Foreign Investors in Real Estate survey also chose the U.S. as the top place to invest in property in 2002, with 49% of the respondents saying it had the best opportunity for capital appreciation, followed by Japan, at 16%.
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