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Real estate investment has long been celebrated as one of the most ‘reliable’ forms of investment, and one that anyone who wishes to improve their financial future is likely to want to become involved with.
For the most part, real estate investment is a steady world.
Given that other forms of investment – such as the stock market or currencies – tend to be the exact opposite of steady, real estate has always fared well in comparison.
However, while the real estate market is steadier than other forms of investment, this does not preclude it from being subject to change.
As years pass and investors come and go, the world of real estate investment continues to evolve.
The acknowledge of this fact, of course, brings forth a key question: what will the future of real estate investment be like?
In an effort to answer this question, we’ve peered into our crystal ball, and here’s what we think the future may hold for real estate investors.
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There will be a correction to the residential market, but not a crash
For several years now, the buoyant US housing market has been surrounded by predictions of a crash in the future. This is a belief shared by experts and homeowners alike, and one that has caused more than a few sleepless nights for investors who remember the 2007/8 crash all too well.
However, the housing market is more robust now than it was in 2007/8. The laws that were passed to prevent another crash have made an impact, and – perhaps most importantly of all – domestic buyers are more circumspect about the amount of money they are willing to spend on their homes.
As a result, while a correction is likely due, we don’t think it’ll reach the point of a full-scale crash – which is good news for residential real estate investors.
Retail real estate will continue to struggle
In truth, this feels less like a prediction and more like a simple observance of trends. Retail, as a whole, is struggling; in fact, the situation is severe enough to have been described as an “apocalypse” – and worryingly, one that some believe is only just beginning.
With retailers struggling to make ends meet, battling against the seemingly inevitable tide of consumer preference for online shopping, it is difficult to see how the retail real estate world will be able to flourish over the next few years.
The popularity of eCommerce feels very much like a one-way street, with little sign that consumers will tire of the convenience and ease that eCommerce offers when compared to shopping in physical stores.
Given these factors, retail real estate investors will likely begin to diversify their portfolios in order to ensure they can cope should retail fail to recover from a succession of blows.
Exchanges will prove to be popular
For most people, the term “real estate investment” primarily means buying a property, which is then leased out or sold on at a profit.
However, there is a second type of real estate investment; investing in a company that owns a portfolio of properties.
This means that you are technically investing in the company, rather than the bricks and mortar of the properties themselves. While unusual, this method of real estate investing can be very profitable – and is set to be even more accessible in future.
The change is thanks to the launch of the first ever real estate exchange for single properties, which means that you will be able to invest in companies that own one property rather than an expansive portfolio.
While the exchange is currently in its infancy, if it proves as popular as we believe it has the potential to be, this inaugural exchange is unlikely to remain alone for long.
The suburbs will be key for residential real estate investors
The suburbs of any city have long been occupied by older generations, but we believe this may change over the coming years.
With concerns over the air pollution in cities coupling with the rise in the number of people who are able to work remotely, young professionals may choose to decamp to the suburbs far sooner than their parent’s generation may have done.
For residential investors, this may mean that smaller homes in suburban areas become more lucrative. Suburbs have usually been seen as “family” areas, with property sizes to match, but we have a feeling there may be more of a demand for one and two bedroom condos outside of city limits in future.
Conclusion: Real Estate Investment Outlook
It’s impossible to predict the future of real estate investment.
But based on current trends, we believe the above points could well become critical considerations for any real estate investor over the years to come.