March 27, 2014

More good news for real estate investors

A few weeks ago, we shared with you that millionaires view real estate as an attractive investment, and additional and varied sources continue to back up that view.

Earlier this month, Miami-based law firm Akerman LLP released its survey of 200 commercial real estate executives, which showed that confidence in the CRE market is rising.

“An overwhelming majority (70 percent) of real estate executives reported a more optimistic outlook about the market in 2014 than in 2013,” reported Akerman in its press release announcing the results.

The majority of respondents also expect an increase in capital availability for 2014, which would further bolster the industry. The primary source of funding is likely to come from private equity sources, according to these industry leaders, while confidence in the banking industry increased 34 percent since 2011.

“More than half of executives say that the multifamily sector will be the most active market for foreign investment in the U.S., with the majority of capital coming from Europe,” continued the press release.

Elsewhere, the Real Estate Investment Securities Association (REISA) echoed the prediction that the multifamily market would see some of the biggest growth, reporting at its spring conference that “U.S. population is expected to reach 400 million by the year 2050, a growth of three million people per year.” That population growth creates the opportunity for new projects as well as rental increases. Panel experts at the conference reported back-to-back quarters of growth in multifamily property values and rental rates.

The Certified Commercial Investment Member (CCIM) Institute released a trend report in January 2014 that also shows more movement in the office sector of the commercial real estate market, with 64 percent of CCIM members experiencing increased deal activity in that sector in the last quarter of 2013.

Looking even further into the future – another 25 years out ­– experts still predict that real estate will continue to be a sound investment.

“Generally, investors are confident that real estate will continue to offer attractive investment opportunities in 25 years,” wrote Lawrence Delevigne for this CNBC piece, which he closed with a quote from Colony Capital’s Tom Barrack: “Twenty-five years from now, we can’t say what’s Facebook going to be, what’s Apple going to be, or Google; but we can be confident that 345 Park Avenue will still be an office building and it will be worth a lot more than it is today.”

We thought you’d like to know….
Sincerely,

PointOne Holdings