The gap between the Wilshire US real estate investment trust (reit) index & the Russell 2000 small-cap index closed entirely this month, with both down about 5% from the start of April, Torto Wheaton Research chief economist Jon Southard said in the CB Richard Ellis research organisation’s weekly report last Friday.
The reit market corrected severely in early April after a strong US employment report, with 15% lopped off share prices in 2 weeks while the rest of the market was unchanged. Mr Southard said this played directly into the hands of those who believed a bubble had developed in the commercial real estate market.
The reit market recovered slightly faster than the rest of the market in June.
Mr Southard said that, “while we are certain that rising interest rates do negatively affect the value of commercial real estate assets, it is in no way a certainty that real estate assets are any more at risk than any other competing asset.”
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