Real Estate survey 2009: The next leg down

This recession is unusual in that it was not triggered by commercial real estate but has dragged the sector down with it. However, this does not mean that recovery for this asset class will be any quicker or less painful. Louise Bowman reports.

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THE WARM GLOW of recovery that has bathed the capital markets over the summer may have cheered many a trading desk but it may also have blinded some participants to the severe problems that still lie ahead. In the US alone there is a $3 trillion elephant in the room. It is made up of commercial real estate loans and it is a problem that isn’t going away any time soon. “We haven’t got to the worst of it yet in commercial real estate” is the bleak warning from Jon Vaccaro, global head of commercial real estate at Deutsche Bank in New York.