The global real estate market will recover faster from the current credit crisis than it did from the downturn in the 1990s, according to John Carrafiel, global joint head of Morgan Stanley Real Estate. 'This seems a better scenario than what we were facing in the 1990s as governments have stepped in and the market seems to have corrected faster in this cycle,' he said.

The global real estate market will recover faster from the current credit crisis than it did from the downturn in the 1990s, according to John Carrafiel, global joint head of Morgan Stanley Real Estate. 'This seems a better scenario than what we were facing in the 1990s as governments have stepped in and the market seems to have corrected faster in this cycle,' he said.

Speaking on the second day of the Barcelona Meeting Point real estate fair on Wednesday, Carrafiel said that although 'we are not even close to being through the credit crunch, we have started to turn.'

Carrafiel pointed out that the availability of debt has shrunk massively on a global basis with issuance volumes of Commercial Mortgage Backed Securities (CMBS) falling from EUR 200-300 bn in the last years to a virtual standstill at present. 'We don’t expect the CMBS market to return to the previous levels but it may come back to the levels of the 1990s, amounting to about EUR 20 bn. Meanwhile, we need to find other ways of financing otherwise it will be impossible to fill in this gap,' he added.

Carrafiel expects the market will be dominated by refinancing deals in the coming five years as companies will focus on restructuring their loans or extending the maturity on their financing facilities. The coming three to six quarters will see negative economic growth, Carrafiell forecast, but once the market starts to see some growth, commercial real estate will bounce back and recover at a fast pace.