Jonathan Gray, Blackstone Group’s head of real estate, noted headwinds in the commercial property market. The present volatility in financial markets may be hindering the demand for real estate. Gray spoke at a conference last month and said that rates of return are declining and it’s “very difficult” sell and bundle real estate loans, hindering debt financing for transactions. Blackstone Group is the largest private-equity property investor, with nearly $94 billion under management in real estate.

U.S. commercial real estate prices fell in January for the first time since 2010. The decline had indicated a sign of weakening investor demand following a six-year rally which pushed values to records. The Moody/RCA Commercial Property Price Index fell 0.3 percent from December. The decline was led by office and industrial buildings each having a price drop of over 1 percent.

“While the national multifamily market remains strong, global volatility is slowing down financing through commercial mortgage-backed securities (CMBS) and reducing rates of return on commercial real estate in general,” Gray also said at the University of Texas Investment Management Company in Austin on Friday. Gray sees the rates of return as  “definitely coming down” because the property cycle is “much more mature.”

Blackstone continues to remain “Bullish” on U.S. housing.

Gray said U.S. housing has “a lot of room to run.” The low oil prices and economic volatility in China, Russia and Latin America have led to a slowdown in the creation of commercial mortgage-backed securities, The Real Deal recently reported. Gray also spoke to Bloomberg, stating “It’s very difficult” to do securitizations today. Blackstone has also been one of the largest property buyers since the last economic downturn. The firm forecasts higher cap rates as it sells investments from here on out, Gray had said. The firm has a significant rental portfolio which Gray also noted to be doing fine as well. Blackstone’s Invitation Homes unit, currently owns 50,000 single-family rental homes in the United States. The Invitation Homes unit, has seen a 97 percent occupancy and rent gains of 5 percent per year.

The firm has also been investing in purchasing shopping centers which are anchored by grocery stores rather than regional malls, which are currently being challenged from the online commerce space. Gray stated that the grocery-anchored centers tend to have steady rents throughout economic cycles. Backstone is active in mall investments outside the United States. The firm currently owns an estimated 30 malls in China, where middle-class consumption is growing.