Real estate still looks like the best investment choice on the table.
Done well, it provides the potential for great returns, passive income, much needed tax savings, and tangible capital protection.
Of course, not all real estate is performing the same. Some pockets of the market are still soaring by 40% or more per year. Others seem to be tanking. Some of this is about location. Though price ranges, and types of properties has a lot to do with it as well.
So, which are the real estate sectors likely to do the best as the market changes through the end of this year, and next?
1. Rental Apartments
While there will certainly still be a fair amount of activity in the luxury sector as the wealthy use real estate for asset protection, one of the biggest trends we are likely to see is a surge in demand for affordable housing.
This is largely about rental apartments. Though some may see mobile homes and other low-end housing as an option.
Don’t be surprised if many new condo projects are converted to rentals.
2. Multigenerational Housing
Affordable housing isn’t just about smaller size, in this phase of the market we also typically see household counts contracting, as aging parents move in with their kids, and kids and their children move back in with mom and dad. Or all of it at the same time to save money.
This is normally in the form of larger single-family homes that can accommodate these different family groups under one roof.
Other types of shared housing can become popular as well.
3. Data Centers
Even if the AI boom goes bust in the short to medium term as many expect, our appetite for bandwidth and internet speed and developer capabilities doesn’t appear to be slowing down.
Data centers could well be a growing sector. Even if it is a controversial one, with many questions about its eco friendliness.
4. Medical Real Estate
It is true that telemedicine is taking over and will likely become more of the norm in the future.
However, a growing and aging population, awareness of pandemics, and interest in longevity is likely to fuel at least the interest in developing new health and wellness solutions.
While offices may no longer be necessary, this is one sector in the commercial property space where physical space is warranted. Labs are still needed for developing biotech advances.
5. Self Storage
Expect to see a lot of moving happening. Whether that is escaping areas of rising crime, having to move home due to crippling 22-year high interest rates, or in the hunt for one of the few jobs left. In between those moves people need somewhere to store their stuff.