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ARTHUR ANDERSEN'S IVAN FAGGEN PREDICTS APARTMENTS ARE BEST REAL ESTATE BET OF THE DECADE

 ARTHUR ANDERSEN'S IVAN FAGGEN PREDICTS APARTMENTS
 ARE BEST REAL ESTATE BET OF THE DECADE
 LAS VEGAS, Jan. 27 /PRNewswire/ -- Increased demand, rising rents and vacancy rate declines are key factors that will make multifamily housing the development and investment winner by the year 2000, according to Ivan Faggen, worldwide director of the Arthur Andersen Real Estate Services Group (RESG). In a panel presentation this weekend at the annual conference of the National Association of Home Builders, Faggen predicted that the current sluggish pace of multifamily construction will quicken by 1993 and remain strong through the rest of the decade.
 "There are both positive and negative factors that will affect the future performance of rental apartments," Faggen noted. "But in the long term, supply and demand will reach equilibrium, values will appreciate and new development will take place. There are certainly opportunities, particularly in select cities such as Austin, Houston and Denver, for developers and investors to do well."
 Investor interest in apartments has seen a resurgence during the past year, according to Faggen. "Many pension fund investors have placed this type of property at the top of their lists for acquisition," he explained, "focusing primarily on 200-plus unit, high-quality developments."
 Overproduction that took place in the 1980s is being absorbed as new multifamily construction has slowed dramatically during the past two years. Vacancy rates, which have declined since 1988, will continue and should reach an equilibrium level of roughly 6 percent by 1993.
 "At that point, there will be substantial rent increases, and it will become possible to earn a reasonable rate of return on new development," Faggen said. "Lower interest rates, and a recognition by lenders that apartments in general have lately shown the best performance of all property types in meeting finance payments, will improve financing for multifamily projects. The outlook for the next six to 12 months is for a steady increase in apartment property values, followed by a gradual increase in rents."
 While new multifamily construction will increase over the next four years, it is not expected to reach the highs it enjoyed in the early 1970s, or even the strong showing of the mid 1980s. According to the January 1992 issue of Real Estate Perspectives, a newsletter published by Arthur Andersen and Michael Sumichrast, multifamily building starts will reach 320,000 rental units and 110,000 condominium units, compared to 130,000 rental unit and 50,000 condo unit starts in 1991. Federally subsidized units will account for only 4 percent of the market share in 1995, significantly lower than the 20 percent share in the late 1970s and early 1980s.
 The Arthur Andersen Real Estate Services Group provides accounting and audit, tax, information systems, financial advisory, real estate counseling and appraisal services. With more than 6,000 clients and 1,500 personnel, the RESG is one of the largest international real estate accounting and consulting organizations. The RESG is a practice area of Arthur Andersen, which includes over 30,000 professional personnel in 307 offices in 67 countries.
 -0- 1/27/92
 /CONTACT: Gregg Nicholson of Arthur Andersen & Co., 415-546-8474/ CO: Arthur Andersen Real Estate Services ST: Nevada IN: FIN SU: ECO


RM -- SF001 -- 3522 01/27/92 08:02 EST
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Date:Jan 27, 1992
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