Jon Gray described the current market as a “trough” that should inspire investors to make new purchases, and said investors who act quickly will be rewarded once prices recover.
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The president of Blackstone Group believes that real estate prices have hit bottom and the time for investors to enter cities is now before housing prices recover.
Jon Gray, president of the $1 trillion asset management company, said in a recent interview Burundi Investors who are too cautious now risk missing out on opportunities because they believe property prices will soon rise in response to interest rate cuts.
“Before interest rates come down, now might be a good time to act,” Gray said. “The perception is so negative, the headlines are negative, but values have fallen.”
Gray described the current market as a “trough” that should incentivize investors to make new purchases, with investors who act quickly being rewarded once prices recover.
“I’m not saying there’s going to be some kind of V-shaped recovery, but when you get into this bottom period, that’s when you want to take action,” Gray said. “As an investor, you can miss this opportunity by being too cautious, and I think now might be a good time to act before interest rates come down.”
Gray further explained that the forces shaping the current housing market have already occurred, and the next major driver should be the Federal Reserve’s interest rate cuts.
“The real estate industry has obviously been hit by two huge forces, one is working from home, which has really hit the office industry, and the other is rising interest rates, which is causing the cost of capital to go up, and the real estate industry is going to grow exponentially down that,” Gray said. . “We’re seeing capital costs start to come down, spreads are starting to tighten, new construction is down significantly, so in the sectors that we like – logistics benefiting from e-commerce, digital infrastructure, student accommodation, hotels – we think there are opportunities.”
The billionaire investor also added that while he expects some financial institutions to take a financial hit from the ongoing real estate downturn, with the turmoil focused on commercial real estate, he expects the industry as a whole to remain largely stable.
“I don’t think this is systemic,” Gray said. “I don’t think it’s going to be like 2008-09 in terms of the scale that we’re facing, but I do think there will be some situations.”
Blackstone’s asset management portfolio totals $1 trillion, and the majority of its real estate holdings are commercial real estate, although the firm also has interests in credit, infrastructure, hedge funds, insurance, growth stocks and secondary markets, and most recently Rent after making a big bet on the residential sector with its $3.5 billion acquisition of Canadian real estate company Tricon Residential.
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