Emerging Trends report for 2006.

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Although a continuous flow of capital has kept the real estate industry stable overall, expect growth in 2006 to be more moderate compared with the robust levels of 2005, according to a report released by the Urban Land Institute (ULI), Washington, D.C., and PricewaterhouseCoopers LLP, New York.

The report, Emerging Trends in Real Estate[R] 2006, noted that much of the outlook for the real estate industry in 2006 will depend upon what happens with a variety of economic factors such as consumer spending, energy prices, housing demand, job growth, corporate productivity gains and inflation.

"Despite improving market fundamentals and continuing capital infatuation with real estate, Emerging Trends interviewees signal caution over a looming transition to a period of more measured, possibly lackluster, performance," the report stated.

However, the report also emphasized that the lower expectations voiced by the participants "do not translate to anything dire," and the consensus forecast suggested that real estate will hold a value edge over stocks and bonds, at least in the near future.

The report noted that solid corporate earnings translated into only moderate hiring in office jobs. The continued focus on cost-cutting, managing space costs and productivity increases--including technological advances that enable more employees to work anywhere--will dampen demand for office space.

Meanwhile, the threat of inflation will continue to...

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