Colliers CEO optimistic about isle real estate
Douglas Frye says the commercial market in Hawaii is basically "still very strong"
Douglas P. Frye, president and chief executive of Colliers International, was in town last week from Seattle visiting the Colliers Monroe Friedlander office. He shared some thoughts on real estate investments with the Star-Bulletin.
Question: How is the subprime meltdown affecting commercial real estate investments?
Answer: The reality is it's going to have a lot to do with how we react to the news. We have a tendency to overreact. The subprime issue is a real issue -- it's something the capital market is going to have to deal with.
As far as impacting commercial real estate, I'm in the camp that the fundamentals of real estate are still very strong. The prognosis is still very positive.
You have to remember even if you have an issue with the capital markets, you still have a tremendous amount of capital in the marketplace. If there's an issue, you need to change your underwriting criteria a little bit.
Q: How is Hawaii different from the mainland?
A: Here in Hawaii, your market is similar to Seattle, San Francisco or Boston. There's a little amount of land and constraint on building, which is going to allow you to continue to enjoy nice rents. Hospitality and lodging is continuing to perform great across the whole U.S. and will continue to do well in Hawaii as well.
Q: Will mainland investors be as interested in Hawaii as in the past?
A: Despite what's happening to companies, and how the bond markets impact them, the fundamentals of real estate are still very strong, It's still a desired investment vehicle, and people will continue to put money in it. Hawaii's still a phenomenal market, and it has treated its investors very well.
Q: What's hot in Asia right now?
A: Shanghai and Hong Kong have shown exceptional growth, as well as Beijing, with the Olympics coming up. Countries that are doing a lot of work globally include Korea and Singapore; Singapore is a great market for industrial-based investors.
Q: When will we see a recovery from the subprime crisis?
A: My opinion has a lot to do with how people respond and react. If people continue to make good decisions, I think the overall credit crunch could stabilize in the next nine to 12 months.
Over the next 12 months, you're really going to have to do your research and be smart to make money in real estate. It's a transition to the good old-fashioned hard work to make good decisions. There's no tremendous falloff or recession.
