Successful apartment investors know it is critical to monitor the prevailing real estate trends. And, unlike the volatile equities market, the trends that affect apartment investing are far-reaching and slow-moving – giving the vigilant real estate investor plenty of time to make the right adjustments to their portfolio.
Along these lines, we’ve discussed the generational trends of the Baby Boomers and Echo Boomers, as well as the ownership trends of decreased homeownership and correlating increase of rental households. Those trends are driving an upward trend in real estate investing, both globally and locally, as the international equity markets remain dysfunctional.
Apartment Investing Growing Globally
On a national and global stage, industry experts are seeing investors moving toward real estate as their trusted and secure long-term investment.
Jones Lang LaSalle’s second quarter 2011 Global Market Perspective, which assesses the impact of economic forces on the world’s major real estate markets, predicts this year will be the strongest performance and real estate trade volume since the market height of 2007.
They are not alone.
Apartment Investing is attracting Optimists
According to the Global Commercial Property Survey from the Royal Institution of Chartered Surveyors, optimistic sentiment towards real estate is being felt in an increasing number of countries. Property professionals, particularly in emerging European markets, appear increasingly bullish towards the apartment market. The survey suggests a positive outlook for the remainder of 2011, with more countries expecting rents to rise and capital values to increase.
Foreign Investors see U.S. Real Estate as a Shelter from Volatility
Foreign investments in U.S. Real Estate is another emerging trend. International transactions in the U.S. market jumped from $2.2 billion to $4.3 billion in 2010.
Jim Fetgatter, CEO of Association of Foreign Investors in Real Estate (AFIRE), notes growing numbers of foreign investors, spooked by the European debt crisis and the weakening of the euro against the dollar, are now convinced that the U.S. is the safest place to park capital.
Additionally, the Fair Market Index by DTZ Investments gave the U.S. a rating of 89, considered “hot” while the Asia Pacific region also scored a “hot” with a rating of 67.
U.S. Investors View Real Estate as the Best Long-Term Investment
According to a recent Gallup poll, 33% of Americans say real estate is the best long-term investment out of the four choices offered (stocks/mutual funds, bonds, savings accounts/CDs and real estate). This is up from 29% a year ago.
Fewer Americans, one in four, point to stocks as the best long-term investment. Just as many say this about savings accounts and CDs, while 12% say bonds are the best investment. Prior to the recession and financial crisis, real estate and stocks were favored much more than savings accounts and bonds.
Although one in three stock owners see stocks as the best long-term investment — a higher percentage than is the case for Americans overall — essentially the same number think real estate fits this description, similar to opinions among all Americans.
Trends Lead the Way
We are seeing investors, both globally and in the U.S., migrate away from the high drama and low returns of the stock market and move towards the stable, consistent and wealth building asset class of Real Estate. The investors that are putting their cash into multifamily investments and are avoiding volatility while benefitting from demographic trends that will last for decades.