To catch a falling knife

That\’s what it is, trying to call the bottom of a market and start buying again.

Helical Bar has spent the past few years scaling down its portfolio, but Mr Slade said the company intends to start buying again from spring 2009, to seize opportunities that only arise "once or twice in a property career."

He\’s called the market right twice before so should we see this as an encouraging sign? Or is it all different this time?

6 comments on “To catch a falling knife

  1. The yield on prime property has almost corrected but prices are still going to fall for at least the next 3 months. At lot of companies will be looking to refinance their development and in some cases won’t be able to so will look to offload properties. It is widely thought in the market that that will mark the nadir of property prices and should prompt some investment., both domestic and foreign (many are thinking soverign wealth funds will be big investors)

    If so will echo the 1993-4 mini German investment boom when German life funds scooped up key proprties at bargain basement prices after the 1991-92 crash. The market itself (both occupier and investment) did not really recover until several years later.

  2. Maybe he’s trying to reflate the market to enable him to offload the rest of his properties during the Spring 2009 ‘dead cat bounce’.

    OTOH, if we assume prices will fall 40% – 50% from peak, some larger buyers are in fact snapping up whole streets or blocks of flats for 50% less than peak prices, at auctions etc.

  3. Decline in capital values is running about -4% a month at the moment, but with so few transactions occuring, it is getting difficult to precisely define values. What is certain is that that there will be a big tranch of investment at some point next year but it won’t mean that the property market is recovering.

    That will only occur when occupiers start moving and expanding again and rents start growing. In real terms as opposed to nominal, rents have barely recovered from the last property crash.

  4. Funny thing, ACO—that’s exactly what all those subprime/no-down mortgagees thought they were doing, hain’t?

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