Goldman Sachs Asset Management's Real Estate Bet

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Episode Transcript:

Amidst the uncertainties of the U.S. commercial real estate market, Goldman Sachs Asset Management (GSAM) is making a bold move, betting on a potential turnaround. In an interview with Reuters at the MIPIM real estate conference in Cannes, France, GSAM's co-Head of real estate, Jim Garman, expressed confidence in the market's recovery, signaling the firm's readiness to resume investing actively.

While other firms remain cautious amidst falling property prices, elevated interest rates, and high office vacancies, GSAM sees signs of stabilization and opportunity. Garman cited factors such as declining interest rates and a perceived market bottom as drivers for their renewed investment strategy.

The move comes in the wake of a challenging period for the commercial real estate sector, marked by decreased loan originations and economic uncertainty. Despite these challenges, GSAM remains optimistic, contrasting the current conditions with those preceding the 2008-2009 Global Financial Crisis. Executives emphasize the resilience of today's banking sector and anticipate an extended period of deleveraging rather than a quick resolution.

Looking ahead, GSAM is not only eyeing opportunities in the U.S. but is also actively investing in Europe and Japan. However, they acknowledge the potential for a slow and varied economic recovery, emphasizing a focus on sectors driven by technology, demographics, and sustainability.

In a dynamic market environment, GSAM's bold move underscores their confidence in the long-term prospects of the commercial real estate sector, despite the challenges that lie ahead.

This is Tyler Cauble, Signing off