CHICAGO (Reuters) - Billionaire investor Sam Zell on Wednesday compared the current credit-fueled crisis in U.S. real estate to the savings-and-loan meltdown of the late 1980s but said it was a “manageable” problem that would not drag the wider economy into a recession next year.
Speaking at an event here hosted by the Executives’ Club of Chicago, Zell, who made his fortune in real estate, also predicted the U.S. property market would begin to recover modestly in 2009.
“I don’t see any robust change,” he said. “I also see no disaster going forward.”
Zell, 66, acknowledged that the credit crunch had “dramatically stopped all new commercial construction,” but noted that the current environment was good for owners of commercial real estate.
“Commercial real-estate has always been (about) supply and demand,” he said. “If you own the assets, those assets are going to benefit from the fact that there’s little new supply and existing supply will be limited.”
Zell said the key to the housing market’s health going forward would be the strength of the U.S. job market. He expressed confidence that as long as unemployment rate stays below 5.5 percent, it was “very, very unlikely” that the subprime contagion would spread.
“The subprime mess is a mess,” he said. “It’s not much bigger in my opinion or much smaller than the savings-and-loan crisis. Hopefully we will be able to address the problem equally as well.”
Editing by Richard Chang