A useful way to categorize US real estate markets is by risk over time, specifically, risk whether the real estate is residential, office, warehouse or other.
By that measure, real estate values in cities like New York and San Francisco are relatively volatile. In other words, the value of real estate in those markets will, compared to mid-sized markets, tend to increase more when times are good and tend to fall further when times are bad.
This is likely true because these are so-called ‘gateway’ markets. Gateway markets means markets that are attractive to large and/or institutional investors, typically US and non-US pension funds and Wall Street firms.
This suggests that demand for yield affects prices in gateway markets more than in middle markets, and that tenant demand has more impact on prices in middle markets than in gateway markets.
Push for yield drives yields down, so returns in dull, tenant-driven markets will tend to be higher than the returns in glamorous, institution-driven markets.
We have ties with owners throughout the US, and we can introduce non-US investors to opportunities in both medium and prestige US markets.
Full text at https://lnkd.in/dB7YsZh
Comments