Loaded with cash, global property buyers wait for sellers to crack under pandemic strain

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  • Private equity firms have US$328 billion cash to deploy for global real estate investment, according to Preqin data
  • Sellers are only willing to offer discounts of 5 per cent while buyers are hoping for about 20 per cent concession

The world’s biggest real estate investors are sitting on piles of cash, preparing for once-in-a-lifetime opportunities created by the pandemic.

With economies around the world sputtering, commercial real estate prices are expected to come down. How much they will fall is the key question.

Sellers are currently willing to concede discounts of around 5 per cent, while bidders are hoping for about 20 per cent off pre-pandemic prices, said Charles Hewlett, managing director at Rclco Real Estate Advisors. That estimated gap, which is likely wider in specific cases, has put a freeze on deals.

“The mantra for anything that has not got started is: delay, defer and, in many cases, renegotiate,” Hewlett said. “If I’m going to have vintage May 2020 on my books, I want to be able to demonstrate to my investors that I got an exceptionally good deal.”

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