Between 15 and 20% losses in real estate values are expected in 2009, according to the survey of real estate agents, investors, developers, lenders, brokers and consultants by Pricewaterhouse Coopers and the Urban Land Institute.
In general, respondents say financial institutions will continue to be pressured into moving bad loans off balance sheets, using auctions to speed up the process. The property industry faces more foreclosures and no rebound in values for 2009.
'The industry is facing multiple problems. Many property owners are drowning in debt, lenders are not lending, and for many industry professionals, property income flows are declining,' said Stephen Blank, senior resident fellow for real estate finance at the Washington DC based Urban Land Institute.
'There is an unprecedented avoidance of risk. Only when financing gets restructured will pricing reconcile, giving the industry a point from which to start digging out of this hole,' he added.
According to the report, moderate priced apartments in core urban markets near mass transit offer the best investment opportunities, a consistent trend from the previous year.
Distribution/warehouse facilities were the next best investment, according to the experts and downtown office space is expected to outperform suburban markets.
In terms of investment prospects Seattle tops the list followed by San Francisco, Washington DC and then New York which has dropped from the top spot.
Savvy investors will be able to cash in on the inevitable recovery, according to the experts. 'Money will be made on riding markets back to recovery and releasing properties, not on financing structures,' according to the report.
