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January 5, 2008


Property Development Wasn’t a Priority with the Communists

That precious subject line above and the excerpt below are both from this week’s interview with Scott Blasdell in Barron’s:

“When subprime troubles began looming, banks everywhere started to tighten their lending across all real-estate sectors. So where you could get 90% loan-to-value in 2006, later in 2007, it was closer to 65% — and the spreads are also wider. As a result, prices, which were driven up dramatically in the U.S. and also in Europe and Asia, look set to fall … if you’re thinking maximum downside in the U.S., I see a possible 15%-20% correction in property prices, which translates into a 30% correction in REIT prices. We’ve already experienced about a 20% correction in stock prices so far, so we are getting there.”

Note that among the total returns for selected Vanguard funds in calendar-year 2007, the REIT Index fund performed worst, down 16.46%.

(If you’re wondering how I’m able to read Barron’s without paying for it, read this post.)

This entry was posted on Saturday, January 5th, 2008 at 9:59 pm (utc+8) and is filed under China, Real_Estate.

4 Responses to “Property Development Wasn’t a Priority with the Communists”

  1. Capital Gain said:
    January 6th, 2008 at 4:21 am

    I was in Vanguards REIT index fund (VGSIX) for a couple of years and was happy with it, but last Jan I decided to bail. Instead of vacating the asset class altogether, I shifted the funds into Ken Heebner’s REIT (CGMRX), whose Focus Fund (CGMFX) I was already invested in. Ken takes a pretty liberal view of his REIT’s mandate, and he’s a moneymaker. Result: Ken’s REIT was up 30some% vs. the industry which was down.

    And CGMFX didn’t do too bad, either :>)

    Now, about my small cap index fund…:>(

  2. C. Maoxian said:
    January 6th, 2008 at 12:09 pm

    Cap: Yes, Ken Heebner marches to his own drummer which is almost unheard of in the mutual fund biz.

  3. Andrew said:
    January 6th, 2008 at 3:37 pm

    So the question who is buying REITs at the moment?

  4. C. Maoxian said:
    January 6th, 2008 at 3:38 pm

    Andrew: Masochists.

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