Starwood Capital Group chairman and chief executive officer Barry Sternlicht said the flow of capital into the US real estate equity and debt markets was “staggering,” but insisted the country was still the “gold standard” for investing global.
Speaking during a commercial real estate panel at the Milken Institute Global Conference in Los Angeles Monday, Sternlicht joked that the distressed opportunity lasted for all of two months. He then went on to say he did not anticipate any real estate sector seeing the kind of returns that have been observed in the past 18 months, arguing there is now more money than there is opportunity to spend it.
Interest rates, he said, would go up 2 to 3 percent after the November US congressional elections, which could create more distress, but whether there will be enough money to “clean it up” remained to be seen.
One silver lining, according to Sternlicht, was that foreign investors were currently keen to invest in the US, and that foreign investments have boosted US property markets. “The US is still the gold standard for investing,” he said. “I think we all feel pretty good, but the bottom line is we’re going to have to get out of this [real estate crisis].”
While federal deficit spending has bolstered the US economy, resulting in US companies sitting on “mountains of cash”, Sternlicht questioned whether those corporations would invest that money in the US or elsewhere.