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Real Estate Investing Predictions for 2022

COVID-19 just keeps making our lives more challenging and in some parts of the world complicating our pursuit of even those basic needs like food, travel, and shelter.

But those needs must be met, so don’t let a little thing like a global pandemic thwart your plans for capitalizing on real estate investment opportunities that this plague-like every major one before it – unexpectedly reveals as society adapts.

That said, here are some of our analysts’ predictions for 2022, as coronavirus variants continue using up the Greek alphabet and we wonder what alphabet is next in line? 

Supported Housing Outlook for 2020: The Green Agenda Takes Roots 

The term “Supported Housing” in the UK refers to housing for the disabled provided by the central government or housing association. This is a new type of property investment that is both ethical and profitable has become available for investors who would like to diversify their portfolios. The social housing markets offer advantages for medium and high-budget investors.

The supported housing market had always been available to large institutions such as hedge funds, pension funds, etc. Taking advantage of the government-backed leases. In the last few years though, funds have started to delve into this market, making the market available to retail investors.

Why is the Social Housing Market Advantageous for Investors in 2022?

1. The property market prices have skyrocketed in the last few years. Although some thought that Brexit would put a strain on prices, real estate proved its resilience, breaking one record after the other. The only thing that has changed is the buyers’ focus which, during the pandemic, shifted from small apartments in cities to homes in the countryside that make remote working easier. The market entry minimum can be a five-digit figure and the minimum government-backed lease is 5 years. Investing in the social housing market fund could be a fine opportunity to start building an investment portfolio based on one of the most resilient assets in the market.

2. The Residential Market
Rising interest rates will help cool the housing market. The residential market is wrapping up a year that saw home prices hit record highs month after month and sales at their highest levels in 15 years. But federal reserves have signalled rate hikes for the year ahead, and while mortgage rates don’t rise in lockstep with government moves, the National Association of Realtors forecasts the 30-year fixed mortgage rate to grow to 3.5% in the US.

That’s still pretty low, but upward movement will add to the affordability issues that already appear to be muting sales growth. Expect that to continue. Investors need to be aware they might have fewer buyers for their properties.

3. Initiators and Homebuilders Will Have a Good Year

The Census Bureau just reported that housing starts in November were at levels not seen since the 1970s and permits – the first step toward starting and completing a house – continued to post year-over-year increases. A good way for investors to take part in that boom is through buying funds based on professionals with great track records. 

4. Single-Family Rentals Will Remain an Investing Sweet Spot

Institutional investors have gotten a lot of the credit, or blame, for helping to drive up home prices, and a lot of that activity has gone toward building portfolios of single-family rentals (SFRs). In fact, the share of single-family home sales that were to investors rose to 18% last year, and it’s reasonable to expect most of that to become rental properties.

5. Multifamily in the US Will Stay Strong, Especially in the Sun Belt 

Blackstone is buying Bluerock for its 30 multifamily rental communities that are primarily in fast-growing Sun Belt markets like Atlanta; Phoenix; Orlando, Florida; Denver; and Austin, Texas. Meanwhile, the Census Bureau’s latest housing starts report shows multifamily starts keeping pace with single-family homes nationwide and that large metro areas are ceding significant market share to smaller cities. Investors should consider looking to these areas for the best opportunities in the year ahead.

6. Office real estate will continue to sputter

The assumption that 2022 would be a rally year for office real estate has been pushed back by the omicron variant surge. Apple has just said it now has no set date for bringing office workers back, and more companies will likely follow.

Meanwhile, white lab coat space, AKA life sciences, will continue to be in demand – the next year looks it could be another one of sitting at home and waiting.

7. Industrial Real Estate Will Present Diverse Growth Opportunities

Industrial real estate – especially that large chunk of it devoted to logistics – has been and will continue to be perhaps as hot as any segment of commercial real estate easily accessible to everyday investors. The dynamics driving the surge, including virtual shopping and e-commerce and the supply chain issues that are encouraging the growth of “just in case” instead of “just in time” use of warehouses, are going to hang around as long as the pandemic.  

About the Author
Dan Dobry was the founder of the Union of Financial Planners in Israel (UFPI), served as the first Chairman and President of UFPI. Dan was the Global Council Representative for Israel for the Global Community (FPSB) from 2012 - 2018 and from January 2019 is a member of the Committee for Standards and Qualifications for the European Union (SQC).
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