Avoiding real estate… for good?

While many real estate investors are hoping for a global market stabilization, a special report from the Economist argues that property investment might be a terrible mistake — in any financial climate. In fact, the report points out that the launch of some of the most ambitious skyscrapers in history — including the Empire State Building and the half-mile tall Burj Khalifa completed recently in Dubai — often coincide with some of the worst global economic crises (the Great Depression and the current recession, respectively). Brian Robertson, head of HSBC bank’s European operations, said that the amount of debt involved in real estate makes it such a tenuous investment. “Banks are leveraged and property is leveraged, so there is double leverage,” Robertson said. “That is why a property crash is a problem for the banks.” [Economist]

Sign Up for the undefined Newsletter