“The real estate sector has felt the tightening conditions in credit markets perhaps more than any other sector due to its heavy reliance on capital,” says Howard Roth, Global and Americas Real Estate Leader at New York-based Ernst & Young.”
“Financial conditions for real estate projects are undoubtedly worsening and the current financial markets landscape is expected to persist for the next couple of years.”
Still, he notes, "In this time of great economic uncertainty and lack of liquidity, many companies are proactively looking for ways to effectively manage risk, streamline operations, and enhance their business relationships so they can hit the ground running when markets begin to stabilize."
---A global war for talent -- globalization of business has also created a worldwide talent pool with countries forced to compete for human capital.
---Inability to find and exploit non-traditional global opportunities -- with competition increasing worldwide from sovereign wealth funds and others, many global investors face a tough time sourcing new deals that will meet return expectations.
---Economic vulnerability and regulatory risks in developing markets -- developing markets are a key focus for global real estate firms but regulatory risk in these markets is constantly changing as authorities seek to jump start economies.
"The real estate industry as a whole is focused on simplicity, transparency and quality deals. However, when things are going really well it tends to mask organizational inefficiencies," says Costello. "Companies which address those issues now and solidify their businesses will be in a much better position to address future risk threats."
"The real estate industry as a whole is focused on simplicity, transparency and quality deals. However, when things are going really well it tends to mask organizational inefficiencies," says Costello.