Blackstone expects lower property returns as CMBS falters

Seattle

RETURNS from US commercial real estate are likely to moderate amid capital market volatility and muted economic growth, said Jon Gray, global head of real estate at Blackstone Group LP.

"Rates of return are definitely coming down" in the US, Mr Gray said last Friday at a meeting at the University of Texas Investment Management Co in Austin. While it is too early to call the end of the recovery, the property cycle is "much more mature", and investment yields - as measured by capitalisation rates - are "very low", he said.