Excellent insights from NAR: As the nation’s and world’s economies start to emerge from the deadly pandemic amid historically low interest rates, investors are leaving no stone unturned in their quest for higher returns. The search for “alpha” is intensifying amid the surge of capital pumped into the markets by the Federal Reserve’s (Fed’s) aggressive monetary policies and the government’s fiscal stimulus.
How do we find alpha in the real estate sector? It involves identifying the opportunities that others may have not considered. It’s about not thinking like everyone else. Alpha can be found as investors commit capital to a broadening array of value-add and opportunistic strategies that reflect an appetite for higher total returns than those expected from core, traditional properties. In particular, the industry should rethink the products in which it is directing capital, those beyond the “four main food groups” that have heretofore not been strongly considered by the private marketplace. These include data centers, single-family rentals, life sciences and cold storage facilities. Click HERE for the entire report.