Is the global real estate market a bubble or an opportunity? Plenty of conflicting data argues either point of view. Red Herring spoke with Steve Coyle, chief investment strategist for Citigroup Property Investors, to get his read on the current trends and worries ahead in both the commercial and residential real estate markets.

Red Herring: Where does the real estate bubble manifest itself right now?

Mr. Coyle: The bubble exists much more in residential than in commercial markets. And it’s happening more on the East and WestCoasts of the U.S.

Red Herring: What do you take note of in determining the health of the real estate market?

Mr. Coyle: Are incomes increasing relative to the housing market? In the Bay Area, for example, it is about 2.5 times for each dollar in income, whereas in Las Vegas it is four.

Red Herring: Does the real estate bubble and the rising cost of gasoline create greater problems?

Mr. Coyle: We did analyses on gas prices and its impact on retail sales. If a barrel of oil hits $65, then disposable income falls by 1.9 percent. We really don’t see trouble with oil prices until it hits $100 per barrel, which is estimated to drive down disposable income by 6 to 9 percent. If that lasted for a period of time it would have huge impacts on the economy.

Red Herring: What about the impact on the consumer electronics market and people buying flat-screen TVs or other devices?

Mr. Coyle: Generally, the rise in oil hasn’t had an impact. And higher housing prices have not deterred businesses, because they tend to move to lower-cost areas to set up call centers and manufacturing operations. That, however, is less true for knowledge-based work like R&D and sales and relationship-driven work.

Red Herring: What’s the biggest misconception when it comes to commercial and residential real estate markets?

Mr. Coyle: That the commercial and residential markets have performed differently and the basic fundamentals are different. Right now the commercial market is benefiting from the strengthening business sector.

Red Herring: What is the good news?

Mr. Coyle: The good news is corporate earnings are growing at a decent clip, and faster than rents, so the ability of companies to take on real estate space is better than in past years.