William Mack, chief executive of the real estate investment company AREA Property Partners, said that the economy and the real estate market continue to be in the throes of serious tumult and that investors should turn an eye to overseas markets for future opportunities.

“There is a temporary calm when you’re in the eye of a storm,” Mack said, giving what he admitted was a pessimistic assessment while participating on a real estate panel in midtown yesterday.

There have been varying opinions about what stage of recovery the economy is in and how it will impact a real estate market gripped with problems. 

Due to sharp drops in real estate values from peak prices seen before the downturn, there is billions of dollars worth of commercial real estate carrying outsized mortgages that are impossible to refinance.  The situation has been compounded by an anemic leasing market amid rising unemployment and steady jobs losses around the country.

Still, banks have been able to put off having to foreclose on properties or purge them from their balance sheets at discount values because of the leeway they have been granted by the government to hold the properties without having to recognize losses.  In the past, financial institutions were required to make accounting disclosures acknowledging depreciated assets.

The resulting stasis in the sales market has prompted some real estate experts to speculate that many banks very well could wait out the tumult when the assets collateralizing their loans will be able to be refinanced or sold at far healthier values.

Stephen Ross, the chief executive of the real estate development firm the Related Companies and another participant on the panel, which was held by the New York University Schack Institute of Real Estate, seemed to feel that lenders would hold on.

“There aren’t any distressed properties,” Ross said. “The early 1990s are still in everyone’s mind… the amount of money people made.  Institutions are waiting to see if they can capture those profits back… they’re not about to unload today unless forced.”

And by forced, Ross seemed to hint that only government regulators could prompt banks to cut assets loose.

“Wait a year,” Mack countered.

Mack appeared to be saying that purge is an inevitable and necessary part of the recovery, not something that can be avoided through mere attrition. 

“We can’t say that we’re stabilized until transactions happen and capital comes in,” Mack said.

There has been much concern about such an event for the destabilizing effect it could have on a banking sector that has appeared to be recovering from near-unprecedented upheaval a year ago. 

One of the critical components to the economic recovery, Mack said, is how consumer spending fairs.  Spending is both a symptom and a driver of job growth, which in turn is one of the key underpinnings of health in the real estate sector.

“There is still the fear of a double dip… if consumers don’t follow though after the stimulus runs out there will be a double dip,” Mack said.

With the tangle of economic uncertainty at home, Mack pointed to a brighter picture abroad, especially in areas well known for their potential for growth such as China. 

Ross agreed.  Ross said that he has had to reinvent his company.

“We were a development company… that’s an oxymoron today,” Ross said, stating that Related has secured approvals so that it could buy assets from failed banks seized by the FDIC.

But Ross said that with development in the United States at a standstill, he has gone to the Middle East and China to build.

“China has the same characteristics as we did in the 1950s, people want to grow there, people want to make money and spend money,” Ross said, noting that the US has become “more like Great Britain after the war, more socialistic leaning.”

“Saudi Arabia is a tremendous opportunity,” Ross added. “70 percent of the population is under 22… there is going to be big change.”

Another participant on the panel, William Rudin, chief executive of Rudin Management, an owner of commercial and residential property in the city, countered that he still saw opportunities here. 

“There are distressed properties in the outer boroughs,” Rudin said.

Rudin also mentioned that rezoning in the city would create new neighborhoods and opportunities.  He cited the Meatpacking District as an example of the kind of profound and unexpected growth that is still possible here.

“Ten years ago who knew it would be one of the hottest areas in the city,” Rudin said. 

When panelists continued to talk about overseas investment, Rudin said, “You keep looking outside the US, I’ll keep looking here.”