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2009 is a year to ‘hang on and stay alive’

Real estate executives predict more pain for the next 12 months, with fewer people believing the debt markets will improve significantly over the coming year.

Senior real estate executives are predicting more pain for the industry in 2009, with one professional warning 2009 was a year to “hold on and stay alive”.

The US Real Estate Roundtable, in its latest industry sentiment survey, revealed that a majority of the 130 executives it interviewed expected the first six months of 2009 to be “very painful”, with hospitality and retail particularly hit.

Although some professionals believed the US property markets would “bottom” out in the second half of the year, one investment bank real estate head told the industry lobby group: “The second half of 2009 will not be as painful as the last few months. 2009 will be a year for muddling along, and the true rebound will begin in 2010.”

The latest survey showed that half of the 130 veterans questioned believed real estate valuations would be “somewhat or much lower” in 12 months time. That compares with 69 percent in the Roundtable’s October 2008 survey.

However, the survey warned that fewer people believe the credit markets will improve over the next 12 months, compared to October last year. Asked whether the availability of capital would be better in one year’s time, just 55 percent responded “somewhat better”, compared to 62 percent who agreed to that statement in October 2008.

Around 38 percent of those questioned said the debt markets would be “about the same or somewhat worse” this time next year, compared to 30 percent during the latest survey.

Real Estate Roundtable president and chief executive officer Jeffrey DeBoer said for many of those questioned the US government stimulus package would help draw a line in the sand between the current difficulties and a reinvigorated market.

“We are in the midst of an extremely challenging economic environment, but with the right policies in place, our members are optimistic that the markets can bounce back as soon as 2010. But the time to act is now, before even the best businesses go bad,” DeBoer said.

Among those questioned were Callahan Capital Partners' Timothy Callahan, David Reilly of Cornerstone Real Estate Advisers, Michael Glosserman of JBG Companies, Eric Resnick of KSL Capital Partners, Glenn Shannon of Shorenstein Properties and Kevin Race of Wells Real Estate Funds.