While some economists say the housing markets may have hit a bottom, others say there is more doom and gloom to come. Quintin Primo, chairman and chief executive of Capri Capital Partners, shared his insights on the real estate sector.
“We are to expect very sluggish growth over the course of the next couple of years,” Primo told CNBC.
“2010 is not going to be a robust year—you’re going to see transactional volume increase, but with unemployment above 10 percent…I don’t think we’re going to be too excited about the numbers in 2010.”
According to Primo, residential real estate tends to lead economic cycles while commercial real estate lags. He said the worst is over for residential markets.
“In commercial, there’s going to be softness, weakness in the operating environment,” he said. “But even there, the true worst may be behind us in terms of prices. I think we’re looking at the bottom—we’re at or near the bottom and over the next 12 months, we’ll get a lot of transactional bottom.”
Primo said the highest risk-adjusted returns across the major property groups has always been found in apartments, especially multi-family rentals: “Apartments are very defensive of all property types,” he said.
Primo underscored the widening gap between residential and commercial:
“As an institutional investor, the way to access the residential real-estate market would be through mortgage-backed securities."
"There’s been a tremendous tightening of spreads…so you’ve almost missed the rally in residential real estate," he said. "But commercial, there’s still blood on the street flowing freely."
- Watch Primo's Previous Appearance on CNBC (May 21, 2009)
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No immediate information was available for Primo or his firm.