Real estate continues to gather growing attention as an investment vehicle. This is a world where gleaming, futuristic new cities seem to be sprouting overnight in countries like China and India. In developed countries like the US and UK, other cities reinvent themselves; old warehouses transformed into chic wedding venues and upscale condominiums, and derelict downtown districts become sparkling centers of nightlife. Perhaps it’s no wonder, then, that investors seem to be drawn to real estate as an attractive option.
But uncertainty plagues the real estate market as much as it does the traditional stock market, and the great real estate crash of 2008 is still well within recent memory. As we enter increasingly tumultuous times, where does real estate investment go from here? What’s next on the horizon for the savvy investor?
The future of real estate investing is…
Tech-oriented. Real estate investing in 2020 and beyond will increasingly rely on technology to find and manage new opportunities. A number of new technologies loom on the horizon, their impact as yet not realized, like blockchain to more tightly link investors to specific properties and introduce liquidity to real estate investments. In the meantime, software to manage portfolios and investments, the Internet of Things linking the various devices in property and aiding in utilization and utility bill optimization, and fractional investment platforms like Fundrise are already transforming the markets. Those forces will only continue to grow in sophistication and ease of use. Why is a tech-oriented future so critical? Partly because of the next trend.
“Investing in real estate has always been an attractive option for investors, and that’s not going to change.” According to Jake Marmulstein, CEO at Groundbreaker “It’s been shown decade after decade that careful (and professionally advised) real estate investment offers incredible risk-adjusted returns. The advancements we’re seeing in real estate tech and policy will only make real estate investing more attractive and accessible.”
The future of real estate investing is also…
Youth-focused. Specifically, the future is millennial-focused, as that generation takes over from the boomer generation as the largest demographic in the real estate market. Millennials are buying, selling, and investing at ever-greater rates. As millennials enter more fully into the real estate markets, expect investors to take note, and customize portfolios accordingly. Of course, this is already happening. The intersection of the wellness industry, millennials who are increasingly health-conscious, and real estate look to be a particularly lucrative one; wellness real estate is reportedly on track to reach nearly $200 billion worldwide by 2022. Looking towards the future? Look for real estate investment niches and trends that appeal to younger generations, especially millennials for the next couple of decades.
And finally, the future of real estate investment is…
Data-driven. This fits with the other two trends, right? As technology becomes more ubiquitous across investment platforms, and as a generation with an immense amount of technological know-how matures into potential investors, so it makes sense that future investment opportunities will be found using big data. Surprisingly, real estate has been an area overlooked by high-level analytics. No more! Now, investors are using increasingly large data-sets to find previously overlooked insights. Did you know that homes in Boston with close proximity to a Starbucks increased in value by 171 percent, 45 percentage points more than all homes in the city, between 1997 and 2014? Or that Yelp reviews on local restaurants can influence home prices on a city block? Big data knows. And now, big data is finally beginning to give up its secrets. In the future, algorithms may be able to find hyper-local “sweet spots” for investment, analyzing opportunities, not in the context of a particular city, or even a neighborhood, but down to the street level.
Data-driven, youth-focused, tech-oriented investment opportunities lay ahead of any real estate investor. Go with the trends, embrace the future, and you’ll be better prepared to take advantage of these and any other future trends.
This post was written by Marcus Clarke. Marcus is part of the Editorial team at Groundbreaker – providers of investment management software for commercial real estate.