Don’t worry too much about interest rates: Blackstone’s Gray

"There's a (false) sense that owning real estate is the same as owning a bond.”

TRD New York /
Oct.October 19, 2016 12:00 PM

Jonathan Gray thinks people are getting too worked up about interest rates.

“There’s a (false) sense that owning real estate is the same as owning a bond,” Blackstone Group’s real estate head said in an interview on CNBC Tuesday. “Real estate, like stocks, can see earnings growth. And that’s what we’re seeing today because of favorable fundamentals.”

As the Federal Reserve readies itself to raise short-term rates later this year, many in the real estate industry worry that higher short-term rates could spill over into higher long-term rates, which could increase the cost of financing and put downward pressure on property prices.

But Gray argued that rising rates don’t have to be bad for the real estate market since they tend to coincide with improving fundamentals – such as employment and income. He pointed out that the real estate market “did OK” in previous eras of rising rates.

“We don’t expect to see the growth in value in the next couple years that we’ve seen in the last four or five years,” he admitted. “But we don’t expect to see some sort of sharp decline in the near term.” [CNBC]Konrad Putzier 


Related Articles

arrow_forward_ios
Federal Reserve Chairman Jerome Powell (Getty, iStock)

Real estate stocks outperform broader market but still sink

Real estate stocks outperform broader market but still sink
Federal Reserve Chairman Jerome Powell (Photo by Sarah Silbiger/Getty Images)

Fed “not in any hurry” to raise interest rates: Powell

Fed “not in any hurry” to raise interest rates: Powell
From left: Donald Trump, Jane Goldman of Solil Management, Jorge Perez of Related Group, Stephen Ross of Related Companies, Jeff Greene, Brian Chesky of Airbnb, Sam Zell of Equity Group Investments, Jeff Sutton of Wharton Properties with Adam Neumann, former WeWork CEO (Illustration by The Real Deal)

These US real estate titans made Forbes’ billionaires list

These US real estate titans made Forbes’ billionaires list
From left: Ace Watanasuparp, SVP National Director of Strategic Sales, Citizens Bank; Alan Rosenbaum, CEO/Founder, GuardHill Financial Corp; Mark Favaloro, President, New York Association of Mortgage Brokers

Home lending in the time of corona: “Underwriting is really difficult right now”

Home lending in the time of corona: “Underwriting is really difficult right now”
Coronavirus chaos is driving lenders to safe, stable projects such as 445 West 35th Street (Credit: iStock and Google Maps)

Coronavirus chaos driving lenders to safer projects amid low interest rates

Coronavirus chaos driving lenders to safer projects amid low interest rates
Some investors continue to find U.S. commercial real estate as attractive places to park their capital (Credit: iStock)

Brexits and Bubbles: How investors view Europe’s shaky real estate market

Brexits and Bubbles: How investors view Europe’s shaky real estate market
Many are predicting a housing bubble (Credit: iStock)

Europe could be headed toward a housing crisis

Europe could be headed toward a housing crisis
Federal Reserve Chairman Jerome Powell (Credit: Getty Images)

Fed cuts rates, signaling caution ahead for real estate investors

Fed cuts rates, signaling caution ahead for real estate investors
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...