Commercial real estate is one sector in the property market that is always charting strong growth. Investors are often keen on making investments in this area because it can yield consistent returns despite the stiff competition. However, you cannot just jump into any kind of market scenario you fancy.
Understanding trends and “riding the tide” is the best way to go about making profitable investments in this market. If you are planning to begin investing in this market in 2019 or expand your portfolio further, then here are 5 key commercial real estate trends you need to watch out for.
Trending Commercial Real Estate Patterns You Should Know About
1. Growing Job Markets Mean More Spending Power
The rise of a strong job market predicated on the development of innovative technology means people have more money to spend. Without a doubt, a considerable chunk of this income will be spent on properties. Whether as rent or even as cooperative investment, it is likely the market will see a rise in demand across the board.
The job market also necessitates the prevalence of well-placed properties that can make tenancy for 9 to 5 professionals a convenient matter. So, strategic investments should be made in real estate that will benefit from job creation over the year.
2. Multifamily is Always a Strong Investment
Apartment complexes are growing in popularity despite a large amount of saturation noticeable in the market. Statistics and studies are indicating this will be the most actively invested market in 2019. The number of favourable investment interests in multifamily has risen from 43% in 2017 to 63% in 2019.
The rise in multifamily investment is predicated on taxes and technology. The advent of security and home delivery apps and businesses has resulted in a rise in the popularity of multifamily properties. The US tax codes have also been altered such that this market segment will benefit from these changes in tax laws. This indicates that the market will run strong for some time into the future. Thus, it can be a strong area of investment for individual investors.
3. Aggressive But Cautious Investment Strategies
Rising interest rates in the US market have resulted in some concerns regarding real estate investments. These concerns mostly stem from a similar market scenario witnessed in the global market as well. While it is true that interest rates are rising, there is more need for strategic planning than going bearish on the market.
The current increment in interest rates is not likely to rise beyond a certain point even if it continues to climb in 2019. So, liquidating investments in the market is not the answer to the challenges. Rather, what is needed is a reorientation of investment portfolios to mitigate risk factors and create opportunity for capitalization once the trend normalizes.
4. Foreign Real Estate Investments
International interest in the US real estate market is at an all-time high. Experts indicate that investments will be coming in from the biggest economies in Latin America as well as Europe. In fact, Europe is set to be a major investor in the US market and all necessitate taking measures to ensure domestic investment interests are not jeopardized by this foreign investment influx.
5. Financial Lending Institutions
The US GDP has grown consistently over the past two years at an average of 3%. This positive growth has resulted in a diversification of real estate investment opportunities. Financial lending institutions are willing to lend out money to strong investment plans and investors can take advantage of this to enhance their overall investment value as well as volume.
Executives at the head of large investment firms have also unanimously predicted a more positive year for the economy as a whole. In light of this fact, it can be a good idea to begin investing in real estate markets. However, it would also be wise to keep track of detrimental factors to ensure there are no losses endured.
Real estate investments are best meted out by keeping the trends in mind. Use the trends discussed above to enhance or alter your investment portfolio to get maximum returns.