Notes to The Family Office Real Estate Summit

At the end of last month, 21 George Investors made it to Manhattan for The Family Office Real Estate Summit. In attendance were many top players in the industry including, family office executives, institutional and private money investors, investment fund managers, as well as many other real estate professionals. The daylong event offered ample opportunity to network with likeminded investors as well as highly insightful presentations and panel discussions from leading institutional investors and family office executives.  Here are some of our key takeaways from the event…

While there were a few naysayers in the crowd, an astounding majority remained bullish on multi-family real estate investing. While the recent recession might still be on some investors mind, multi-family real estate is a low beta, historically stable asset class. The liquidity and cash flow make it an attractive investment and the ability to analyze macro and micro trends minimizes risks inherent in other investments.

Not only were the people in the room bullish on United States multi-family real estate, but also a couple speakers indicated we have only seen the “tip of the iceberg” relating to foreign investments in United States real estate. With instability in the global economy leading to a volatile stock market, many foreign investors are finding a safe haven in United States real estate. One speaker felt confident enough to say he was not talking millions or billions, but trillions of dollars of foreign money will be poured into US real estate in coming years.

Analyze! Start by analyzing Macro trends and then continue to look deeper.  A macro analysis helps identify what trends are fading and where there is new opportunity. Some questions raised were, how will the presidential election affect the economy and housing market? What will interest rates do moving forward? Do to continuous technological advances; some speakers were weary of Office and Retail investments due to new live/work trends and online shopping. Climate change was another major point of emphasis. How does recent drastic weather patterns affect geographical investments? Many speakers pointed to demographic and socioeconomic trends to support their bullish multi-family real estate outlook, with Millenials continuing to flock to the rental market and seeking the live/work/play environment, and Baby Boomers downsizing, many speakers persisted rental demand will remain strong for years to come.

While it is important to stay current on macro trends, many speakers emphasized that, due to real estates locality, it is both important and beneficial to analyze local economic trends in a target geographical area. When the subject of a potential bubble in multi-family real estate came up, some pointed to the Millenials again stating maybe after they move to homeownership, but many made the point that if proper local analysis is done a bubble can be avoided.   By avoiding Primary Markets and hot “next” markets where prices are being driven-up by foreign investments and significant new supply is coming online, and opting for lower income secondary markets where demand continues to outpace supply, these assets offer more protection against a bubble.

Overall, the general consensus, from both speakers and individuals in the crowd, was that due to its historical performance, and both macro and micro economic trends, multi-family real estate will continue to be a preferred investment for years to come.