Investment opportunities in digital real estate are limited and still in early days
Did you invest in Russia, hoping to reap high returns? If you exited on time, you may have been fortunate. However, many investors faced disappointing returns, limited liquidity, and, due to Russia’s aggressive territorial expansion, now have little hope of recovering their capital.
In today’s rapidly evolving digital landscape, the concept of real estate has transcended its traditional boundaries, venturing into the virtual realm. Digital real estate, still a niche market, is redefining traditional concepts of property investment. This blog explores two types of digital real estate and highlights its potential and challenges.
Institutional real estate private funds typically come in a number of investment styles. Core funds embody a defensive, buy-and-hold strategy. In contrast, value-add funds seek extra returns through redevelopment, repositioning, and active management. Opportunistic funds, carrying the highest risk, target distressed assets, developments, and mergers and acquisitions. Despite some efforts, a universal definition of these styles remains elusive.
Public outperformed private real estate last year and is expected to continue
Last year, we published a blog detailing the relationship between public and private real estate through the discount to NAV (Net Asset Value) metric. This metric emerged as a reliable indicator of relative performance. A higher discount suggests that public real estate may outperform private real estate in the coming five years.
A required return is a necessary tool to determine
whether an acquisition is worth the risk or not. It provides a minimum hurdle to give investors comfort.
The difficulty is, however, that determining the correct required return is not very simple. It requires 3
fundamental properties.
AI has the ability to fundamentally change the real estate investment industry
In the dynamic world of real estate investment, the advent of Artificial Intelligence (AI) is not just a trend but a revolution. AI’s profound impact is reshaping the landscape, offering both challenges and opportunities for investors and professionals in the sector.
The ongoing debate on whether to prioritize asset selection or strategy in real estate investment lacks a conclusive answer. Existing real estate research hasn’t addressed this question. However, Xiong et al. (2010) researched a similar inquiry for mutual equity funds, benefiting from the widely available performance data in that domain.
Cluster analysis is an easy way to uncover the best allocation method, and correct segmentation
Every investor is faced with the same questions about the ideal allocation strategy. Should you allocate to sectors or regions first? Or is it more important to look at styles first? This dilemma is well known, and there is not one answer, as it depends on the scope of the portfolio and strategy. Furthermore, it is important to have the required data and know how to use it.
All real estate investors are keen to maximize their return. This is often done by selecting the best sector and market, and typically by adding debt. Adding debt is a way to benefit from a cheaper cost of finance. Recently, rates have moved out, reducing the benefit…
Investors should seriously consider to embrace retail as part of their allocation again
Since 2016, the retail sector has been underperforming the overall market. Investors decreased their allocation and sold their retail assets accordingly. As a result, repricing has been substantial.
