RERI: Are The Gateway Markets Overpriced? March 1, 2021
March 2021 - Real Estate
To download the whitepaper click here.
By Joseph L. Pagliari, Jr.
Abstract
The conventional wisdom, supported by current pricing, asserts that the “gateway” markets offer superior returns (as well as liquidity) due to a number of perceived advantages. While this view is largely taken as an article of faith in much of the institutional real estate community, this paper asks whether this conventional wisdom may soon be up ended. In particular, the gateway markets seem firmly ensconced in state and local jurisdictions which often differ markedly from non-gateway markets with regard to a number of important characteristics relating to their political economy: 1) fiscal imbalances, 2) taxation, 3) regulatory burden, 4) public-sector services, and 5) political corruption. At least in this author’s view, these differences represent impediments to growth and newly evolving risks which currently may be mispriced. Time will tell.
To download the whitepaper click here.