Displaying items by tag: real estate

Global real estate is shifting from traditional “visible” assets like office towers and shopping malls to “invisible” property such as data centers. These facilities have become essential infrastructure as cloud computing and AI workloads demand massive amounts of power, cooling, and networking. According to CBRE, 95% of major investors plan to boost their allocations to data centers in 2025, with many committing $500 million or more.

The surge in demand is driving enormous capital requirements, with hyperscale facilities costing billions to build. Boston Consulting Group estimates that $1.8 trillion will be needed globally by 2030 to keep pace with AI and cloud growth. 

Despite funding challenges, investors continue to reallocate away from conventional real estate sectors toward alternatives like data centers, battery storage, and related infrastructure. While construction costs and financing hurdles pose risks, institutional capital remains active, signaling that real estate’s future will be increasingly tied to digital infrastructure.

Finsum: Artificial intelligence may also reshape physical office demand as companies adjust headcount and space needs.

Despite high interest rates and rising property prices, real estate investors still have several promising opportunities to consider in 2025. 

1. Experts point to both short- and long-term rentals as reliable income sources, with travel demand and declining homeownership supporting steady occupancy and profitability. 
2. Distressed, off-market properties are also gaining traction, offering value to investors who can act quickly and renovate effectively. 
3. Multi-family homes, especially triplexes and fourplexes, are ideal for new investors looking to house hack—living in one unit while renting the others to offset mortgage costs. 

Another savvy strategy is converting basements into rentable units, particularly in high-rent cities, where this can generate solid monthly income. 

Finsum: In short, even in a tricky housing environment, creativity and timing can open doors to strong real estate returns.

The valuation gap between public and private real estate has persisted, creating potential buying opportunities for investors. REITs have generally maintained higher or comparable occupancy rates relative to private real estate across major property sectors. 

They also remain more attractively priced, with cap rates exceeding those of private real estate, suggesting better value. In the fourth quarter of 2024, public-private cap rate spreads ranged from 80 to 169 basis points, highlighting REITs' pricing advantage. 

Strong operational management and asset selection contribute to REITs' higher occupancy rates, particularly in retail and office spaces. 

Finsum: REITs continue to offer investors access to high-quality properties at compelling valuations and could provide more inflation resistance. 

The real estate market has endured a challenging two-year downturn, but conditions now present a compelling investment opportunity. Property values appear to have stabilized, setting the stage for a potential market recovery, with history suggesting that early investors stand to benefit the most. 

Strong fundamentals across various property types reinforce real estate’s long-term role as an inflation hedge and a steady income source. As interest rates decline, traditional fixed-income yields may compress, making private real estate an attractive alternative. 

Compared to stocks and corporate credit, real estate valuations remain appealing, particularly given its potential for portfolio diversification. The sector’s dislocation in capital structures has created opportunities to acquire high-quality assets at adjusted prices. 

Finsm: Ultimately, blending real estate equity and credit within a portfolio can offer both stability and upside potential in the evolving market landscape.

Despite the ongoing challenges in the residential REIT sector, some companies are well-positioned to benefit from strong demand and strategic advantages. Equity LifeStyle Properties, for example, focuses on manufactured home communities and RV resorts in high-demand locations, benefiting from favorable demographics and constrained supply. 

Veris Residential, with a modern Class A portfolio and a tech-driven approach, is poised to capitalize on scalable growth in the Northeast market. UMH Properties, which operates manufactured home communities across several states, is likely to see continued demand, particularly due to high mortgage rates that make renting a more viable option for many. 

These REITs are leveraging technology to enhance operations and optimize revenue, allowing them to adapt to evolving market dynamics. 

Finsum: Including an influx of new rental units and increased concessions, these companies offer strong prospects for future growth.