It’s the cycle, stupid?

There was a (mainly US-focussed) piece in today’s FT about the growing popularity of careers in real estate amongst MBA students.  Their story is of a shift away from banking towards technology and real estate companies.  Here are some brief extracts…

In its (banking) place real estate, the scapegoat for the great recession, has soared in popularity among students as the market heats up and more jobs open in the sector.

Apart from the ebb and flow of the cycle, real estate offers a connection to physical beauty and tangible assets, compared with illusory financial securities, students say

It’s a pretty balanced piece that puts this interest in the context of rapid growth in real estate asset values.

This boom has fuelled “huge” interest from students, says Nancy Wallace, professor of real estate at the University of California, Berkeley’s Haas School of Business. “They’re fleeing banking . . . real estate is cyclical, and MBAs follow cycles really closely,” she says.

This poses a risk that just as all these students march into real estate, they could be left out in the cold when they need a job and the market has retreated, echoing the history of their older banking peers. Ms Wallace says Berkeley is limiting class sizes to combat this risk, so students do not “all pile in while the cycle is hot”, and similar efforts are under way at Wharton and NYU.

It helps place the recent growth in postgraduate real estate students in the UK in some context also.  I don’t see much self-discipline in the UK amongst universities.  The MSc in Real Estate and Planning at UCL has approximately 100 students on it this year.  It was around 60 last year.  While demand for undergraduate has remained pretty stable at Reading, the MSc Real Estate has over 160 students on it this year.  Argghhh….the marking!


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