Investing in Emerging Real Estate Markets
There are various reasons why people should invest in emerging real estate markets. Emerging markets typically provide a pro-landlord, pro-property owner viewpoint. For investors struggling to increase their property returns, investing in emerging real estate may be the best strategy to alleviate their return issue. Emerging market real estate is an attractive investment not just because of its higher appreciation and income potential but also because of the scarcity of investors. It is referred to as “emerging” because it is not yet on everyone’s radar, and some individuals are too hesitant to invest. With this in mind, investors should take advantage of these niche markets before deals become too expensive for them to afford.
When Is the Best Time to Invest in Emerging Markets?
Even in exceptional times, experienced investors recognize that every market has its dangers and benefits. Investors in commercial real estate are often looking years ahead rather than making short-term decisions.
Several aspects within the commercial real estate industry appear to be reverting to pre-COVID patterns. In contrast, other aspects seem to have sustained persistent shifts to a “new normal” as the pandemic drove ongoing changes in specific sectors. Commercial real estate has shown its resiliency through these unprecedented times, and investors can be confident that commercial real estate will provide profitable returns if handled correctly.
Emerging Markets 2023 Predictions
Given current economic forecasts, the commercial real estate industry is expected to face some challenges in the first half of 2023. The future of retail and office space is uncertain. Furthermore, supply chain concerns linger, and inflation saw some high numbers throughout 2022, pushing the Fed to gradually raise interest rates. However, there are encouraging signs in the commercial real estate forecast. Both multifamily and industrial properties continue to perform well despite a rise in economic concerns.
Top Emerging Real Estate Markets
A concept continuously mentioned in this year’s PWC Emerging Trends survey is the dominance of “magnet” markets, many of which are located in warmer Sunbelt regions. They top the Emerging Trends “Markets to Watch” standings, while the number of markets in cold-weather climates in the Northeast and Midwest is declining in ranking.
Most of the top-ranked real estate areas are in faster-growing southern and western regions, away from the coasts. Nashville remained the top-rated metro area, but the Dallas/Fort Worth area rose five spots from a year ago to take second place. The Atlanta-metro scored higher in this year’s poll, moving to third place from eighth place last year. While none of the nation’s biggest cities, like New York City or Los Angeles, made this list, the average populations of the top 20 emerging markets topped 500,000 residents in this quarter. That’s more than a 100,000-person rise from the previous quarter.
Top Cities:
- Nashville, TN
- Dallas/Ft. Worth, TX
- Atlanta, GA
- Austin, TX
- Tampa/St. Petersburg, FL
- Raleigh/Durham, NC
- Miami, FL
- Boston, MA
- Phoenix, AZ
- Charlotte, NC
Conclusion
Overall, each investor is different and will make decisions based on their risk aversion. It is advised to research, compare, and ask experienced investors or real estate agents questions when deciding what markets to invest in.
