Glenn August, CEO of Oak Hill Advisors, highlights concerns over the impact of rising interest rates and industry shifts on real estate, urging investors to proceed with caution.
In an interview with Bloomberg Television, Glenn August, the chief executive officer of distressed-debt investor Oak Hill Advisors, expressed reservations about reentering the real estate market at this time. August emphasized that the capital markets in the industry are “somewhat broken” and warned that the full repercussions of rising interest rates and significant changes in the sector have yet to unfold.
Caution Amidst Uncertain Times
Glenn August urged caution in the real estate market, citing the ongoing implications of the Covid-19 pandemic and its lasting effects on various sectors. He emphasized that the ripple effects of this global crisis are still unfolding and the extent of its impact on the industry remains unknown. August specifically highlighted concerns regarding offices and hotels, acknowledging the challenges faced by these segments of the real estate market.
Unpredictable Capital Markets
According to August, the capital markets within the real estate industry are currently experiencing significant disruptions, contributing to the need for caution. He noted that the recent aggressive series of interest rate hikes by central banks has created an environment of uncertainty and unpredictability. These interest rate hikes have the potential to impact the real estate market significantly, making it essential for investors to carefully evaluate their options before diving back in.
Tectonic Shifts in the Industry
In addition to rising interest rates, Glenn August emphasized the occurrence of tectonic shifts in the real estate industry. These shifts are transforming the landscape and dynamics of the market, requiring careful analysis before making investment decisions. With the advent of remote work and changing consumer behaviors, traditional office spaces and hotels may face unique challenges, necessitating a cautious approach when considering real estate investments.
Overall, Glenn August of Oak Hill Advisors advised a prudent approach to the real estate market, acknowledging the uncertain nature of the current landscape. He urged investors to remain cautious and take into account the potential long-term implications of the ongoing pandemic, disruptions in capital markets, and tectonic shifts within the industry. By doing so, investors can navigate the evolving real estate market with a greater understanding of the risks and opportunities that lie ahead.