CBRE Chief Economist Predicts 2018 as the Next Downturn
Interview with Richard Barkham of CBRE
On Covering the Global Real Estate Market
Richard stays on top of the macro global economy, focusing on GDP, instead of tracking local trends and markets. To get a feel for the global economy, he follows business cycles and central bank policy very closely. His agenda is full – travel is obviously part of the job and with 8 months in this position he has been out of the country for 5 months.
On Global Saving
Globally, he sees that many more people are saving, which leads to low demand. He reckons it will probably be 3-7 years until this trend corrects. Richard also believes interest rates will remain low. Real Estate will continue with a slower rental rate growth and low cap rates until China moves from export lead growth to consumer growth.
On Global Policy
He believes that the G20 needs to coordinate economic policy to smooth out investment bubbles and booms. The outlook is looking increasingly bubbly.
The Next Bubble
Richard confidently predicts the next US bubble to be in 2018 and it will be caused by development. Banks aren’t currently as exposed as the last turn, but excessive debt is building up. There is still plenty of runway to get projects done by 2017. He predicted that the single family homes market has pent up demand in the US and is a good place to invest. The global economy is still overly indebted and the next downturn will feel that. When growth slows down this will hurt.