BlackRock Says to Invest In These Three Asset Types
BlackRock's 2024 Private Markets Outlook
The window of opportunity is opening up for real estate investors, says Blackrock in their latest 2024 Private Markets Outlook report.
Value in volatility
The global real estate market is resetting, with declining valuations creating opportunities for investors to acquire premium assets at attractive, often below-cost prices. This market shift, influenced by factors like inflation and rising interest rates, sets the stage for potentially lucrative investments, especially given real estate's history of rebounding strongly after similar periods of dislocation.
The landscape
A major challenge in the market is the significant drop in transactions, largely attributed to the high cost of financing. BlackRock notes that restrictive financing conditions will likely persist, opening doors for non-bank lenders like insurance companies and debt funds.
Top picks for 2024:
Blackrock says, “Income growth and yield will be more important for real estate investors in the dislocated market we see emerging. That places a premium on cashflow durability and rent pricing power.”
1. Apartments in key suburban locations:
These offer promising growth opportunities due to favorable market dynamics.
2. Necessity retail close to metropolitan areas:
This sector has attractive entry points and a low supply, making it a potentially lucrative investment.
3. Logistics hubs near major cities:
The ongoing expansion of e-commerce and diversification of supply chains, including nearshoring and reshoring manufacturing, make these assets particularly attractive.
Finding pockets of promise
In the next few years, the real estate market is expected to see varied performances across sectors and locations, influenced significantly by interest rate changes since mid-2022. For investors, this means a strategic focus on selecting high-quality properties in prime locations, as these assets typically outperform others in the early stages of market recoveries.
Our Take
Our approach involves constructing properties in vital suburban areas across the DFW metroplex. We prioritize areas with limited supply and high demand for newer developments before making any entries.
Source: CRE Daily and ALM|Globest.com, February 8, 2024