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| Real Estate & Land |
Fertile Assets
Michael Verdon
06/01/2004
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Hall
believes that a slow rise in interest rates, perhaps 1 to 1.5 percentage points
over 12 to 24 months, will not cause the market any severe problems. But, he
says, if they go up 3 percentage points over the next six to 12 months, cap
rates could increase and prices could fall.
“We expect long-term, risk-free
rates to rise by about 100 basis points over the next 12 months,” says Peter
Linneman, professor of real estate at the Wharton School of Business, and author
of Real Estate Finance & Investments: Risks and Opportunities. Linneman says
that as real estate begins its slow move through the upside of the cycle, the
long-term rate of net operating-income growth will decline modestly. 
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