PREI Sees Improving RE Market, With Caveat

A strengthening economy should boost demand and improve fundamentals for most real estate sectors this year, but the performance of real estate investments may not improve significantly, according to Prudential Real Estate Investors, Parsippany, N.J.PREI said it expects private, unleveraged real estate investments to produce average total returns of about 8% in 2004, most of which will come from property income. In its annual outlook report on the real estate markets, PREI said, however, that the rebound in the economy and the broader equities market will probably cause some capital to flow out of the real estate sector this year, especially if interest rates rise. "With the U.S. economy gaining momentum and encouraging signs that job growth will accelerate in the months ahead, real estate fundamentals should look better over the next 12 months," said Charles Lowrey, chief executive officer of PREI. "However, while that's good news for investors, real estate investment performance may not necessarily improve significantly this year, and could actually fall short of 2003's results." PREI can be found online at http://www.prudential.com/prei.