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So...
Who is buying all these properties anyway?
Well, depends if you're talking commercial or residential, but to some extent, the answer is the same. Huge investors, who are often investing on behalf of your pension, or of big institutions, like insurers and pension funds.
Now, there's private equity that have massively invested in the real estate, residential real estate, sector in the past few years. And they're buying up these properties, trying to fix them up, and then hold them and rent them out as a steady stream of income.
In the past, we've been more used to a mum and pop kind of landlord market or to social housing. Now you get big portfolios like Invitation Homes.
At the most spectacular end of the market, there is a Manhattan penthouse that was bought earlier this year by Ken Gryphon, the guy who founded a hedge fund called Citadel. He spent $238m to buy that, which is more than anyone spent on a New York apartment ever in history.
Clearly, the buyers for that kind of property are few and far between, although there are many more of them now than they were 10 years ago, because the very richest people have, on average, done much, much better in the 10 years since the crisis than median households.
One of the big problems at the moment is that there's a vast population of people in the residential market who can't afford properties, because they haven't got the money. They've haven't been on the ladder.
If you at office properties, the likes of Brookfield, Blackstone, KKR, big institutional asset managers who run hundreds of billions of dollars for pension funds. They've been looking for safe assets that they think are likely to fare well, whatever the economic weather. That's led to sky-high demand for office blocks in places like New York or San Francisco or strong economies in Europe or booming economies in places like Shanghai or Mumbai.
One of the interesting factors of the last few years has been the rise and the fall of the Chinese investor. So Chinese money really flooded in in 2015, 2016. You saw big inflows into western cities, from a lot of the big Chinese companies.
But a lot of that dried up in 2017 and '18, where you saw China itself actually trying to clamp down on capital outflows from the country. And that's actually had a massive impact on the ability for Chinese investors to come into those western markets. And you've seen them disappear. That was a major prop for the property market, and now that's gone.