Commercial Birla Tisya Apartment: The Future

While serious supply-demand imbalances continue to plague real estate markets in many areas into the 2000s, Birla Tisya Apartment developers are encouraged by the current mobility of capital in sophisticated financial markets. In the short-term, the loss of tax shelter markets caused significant capital to be withdrawn from real estate. This had a devastating impact on certain segments of the industry. Experts agree that many people who were driven from real-estate development and real estate finance were not prepared and unsuited to be investors. The industry will see long-term benefits from a return to realty development that is grounded on economics, real demand and real profits.

In the 2000s, syndicated ownership of real property was established. Many early investors suffered from collapsed markets and tax-law changes. The concept of syndication was introduced in the 2000s. It is now being used to create more economically sound cash flow-return real property. This will ensure that syndication continues to grow. REITs, which were heavily affected by the mid-1980s real estate recession, have been reintroduced as an efficient vehicle to public ownership of real property. REITs are able to own and manage real estate efficiently, and raise equity to purchase it. These shares can be traded more easily than shares in other syndication partnerships. The REIT will likely be a great vehicle for satisfying the public’s desire for real estate ownership.

To understand the potential opportunities in 2000s, it is important to review the causes of the 2000s’ problems. The industry is dominated by real estate cycles. While the oversupply in many product types can limit development of new products it also creates opportunities to the commercial banker.

Real estate saw a boom in the decade that followed 2000. The natural flow of real estate cycles, where demand outstripped supply, was evident in the 1980s and 2000s. In most major markets, office vacancy rates were below 5 percent at that time. The development community saw a surge in capital available as there was real demand for office space, and other income properties. Deregulation of financial institutions in the early years under Reagan increased the availability of funds. Thrifts also added funds to the growing number of lenders. The Economic Recovery and Tax Act of 1981 (ERTA), which was passed in 1981, allowed investors to increase their tax “write-off” by accelerating depreciation, reduce capital gains taxes to 20%, and allow other income to be protected with real estate “losses”. This made it possible to invest more equity and debt than ever before.