Cobalt news
We don’t need things to get better; we just need to know that they’re not going to get worse!
James Wakefield
12/05/2008
So what’s the point? Well it’s simple; the single most crippling thing about the current situation is the uncertainty. Until the market is reasonably certain that things are not going to get significantly worse everyone, including those in relatively strong positions, will be reluctant to make decisions. The lack of decisiveness drives further uncertainty and further paralysing analysis of every economic indicator that might give us some idea of which way things are going to go.
The good news is that the investment banks that initially tried to keep a lid on the scale of the problems they have encountered have now adopted a very sensible worse-case scenario approach in announcing their potential losses. By writing down more now when the market is braced for bad news, they will be able to announce better than anticipated results in the future. The even better news is that this credit crisis has been so immediate and severe that we may well have seen the worst of it already. In the UK it was today reported that bank lending to commercial property increased in Q1 2008 from Q4 2007. The increase, from £7.1bn to £9bn, was not huge but it bodes well for further improvement as the well-publicised Bank of England “rescue package” begins to take effect. There is obviously considerable pain to come and certain markets may never recover but as long as things cannot get worse they can only get better. As George Soros once said “The worse a situation becomes the less it takes to turn it around, the bigger the upside”.
On the subject of George Soros he has famously made his fortune and his reputation by avoiding the herd. However, most of us are in it and just as it has been the herd mentality that has dragged everyone into such widespread gloom over the last 10 months, it will be this that gradually turns us around and sets us back in a more positive direction.
The recruitment angle to all this is that we need the uncertainty to lift so that those waiting on the sidelines can take advantage of the value that is out there. “Taking advantage” generally involves recruitment and those with a relatively intact balance sheet to lend from, or pot of equity to invest will need to hire to utilise either effectively. In a market where credit will be considerably tighter for some time to come, those with the ability to effectively source and structure debt to fund real estate investment and development will be increasingly sought after. As the uncertainty lifts the value of assets will also become clearer and those with portfolios to manage will be able to refinance more easily and start planning for the future. It will be some time before we hear phrases such as “aggressive expansion” or “recruitment drive” in the real estate sector but “cautious growth” and “opportunistic hires” may not be too far away.
Cobalt recruitment is a leader in the recruitment of Real Estate and Infrastructure finance professionals.