16 Aug Trump’s Advisor Warned Real Estate Investors (Bloomberg’s interview)
In an interview at Bloomberg’s Los Angeles office, Tom Barrack warned real estate investors of a possible ominous economic scenario due to the increase of interest rates, as well as to the falling trend of some markets.
Photo by Matt Jones
On one hand the President of Colony Capital Inc. blamed “amateur” investors of challenging the business models landlords depend on.
According to him this is a direct consequence of some market strategies applied by companies like Airbnb Inc. and WeWork Cos., which are offering new alternative to the public like letting people rent out their homes like hotel rooms or leasing space in communal work areas.
Thus, hotels, office buildings and residential properties are seeing threatened they traditional business.
On the other hand, Barrack, who is also one of Donald Trump’s advisers, points out some important factors he had noticed while studying the behavior of the market.
Firstly, in his opinion, technology companies, which are one of the most common target persona that use to rent office buildings could be pulling back if the economy gets weaker.
Secondly, the specialist asserts that some customers of high-end real estate from China, Russia and the Middle East are reducing their budgets. Moreover, as Wall Street bankers are looking at low bonuses this year, hedge fund incomes are getting flat.
Finally, according to the billionaire young people prefer to rent with roommates while trying not to buy homes. That’s why investors are coming with the idea of acquiring residential rental properties, nevertheless, Barrack argue that 60 percent of Americans aren’t able to cover a $1,200-a-month payments.
Original article: http://www.bloomberg.com/news/articles/2016-08-15/barrack-says-u-s-real-estate-market-is-getting-bubblicious