Guest Contributor

Real Estate Investment Opportunities in the New Normal

By | Elaine Bennett

The outbreak of COVID-19 swept over the business world and left virtually no industry in existence intact. There are probably very few fields aside from the retail sector where the effects of the global pandemic were felt as much as the real estate sector. Now, when the virus is showing signs of attrition the property market is still affected by the COVID-induced economy turmoil forming something we can best describe as the new real estate normal.

So the fact that the average prices of new properties are rising by 32.6% while the increase in purchasing power lags behind with only 21% shouldn’t be seen as obstacles but rather the factors we need to leverage to reach success.

What are then the remaining lucrative options we have on the table and how we can use them to our advantage? Let us try to find out.

Residential rentals

Even when they are negative, huge market shifts send ripples that can be leveraged to turn the overall situation around. So, while the sales of new homes recently hit a bump and experienced a 5.9% decline, the people who would buy these properties still need affordable long-term housing. So, all the signs are pointing out that the demand for rental properties will undergo a great surge until the end of 2022. That makes your priorities pretty much the same, but in this case, you will have to deal with a much longer turnaround period, so adapt the rest of your portfolio to these longer ROI and cash flow cycles.

Retail properties

As we mentioned in the introduction, the COVID-19 took quite a devastating blow on the retail sector that had to give away a huge portion of its revenue to the onslaught of emerging online stores. As of lately, however, the retail sector has been staging a comeback scoring a very healthy 14.07% growth in the Q4 of 2021. If this trend proves to be sustainable, the retail properties could once again prove to be a very hot investment option. Until these claims prove to be true, we suggest you keep your money in safe baskets like department stores, and clothes shops that still benefit from customers’ presence.

Foreign real estate options

That’s right – although the entire world is facing similar problems as the United States, the real estate trends are not quite as uniform as we like to believe. Let’s take for example Montenegro – a small and tucked-in Mediterranean country with more than reasonable prices and virtually unlimited potential across the board. Keeping in mind the constant influx of new tourists, ex-pats, and long-term residents you will be able to find good land for sale in Montenegro along the beautiful Adriatic coastline and build a property that will satisfy the needs of either of these groups. Similar examples can be found all around the globe.

Scaled-down commercial real estate

While in the previous passages we have seen that the retail properties are slowly getting back at their feet, the same can’t be said about commercial real estate that experiences a very unique problem in the form of a growing number of remote employees. But, the shrinking number of office workers doesn’t mean the companies are abandoning this business environment altogether – we will only see a growing interest in scaled-down office properties that make better use of available square footage and energy. So, keep this niche market under very close scrutiny since you are going to see a lot of activity there.

Properties with spare rooms and home offices

We are going to spend more time with the remote workers since they are going to play an increasingly important role in the real estate market in the following years. According to a recent survey, by the end of 2025, as much as 22% of employed Americans will work in remote positions. That leaves us with more than 36.2 million people living in houses and apartments that are not entirely suited to this popular new business model. A lot of them will start looking for properties where they can set up proper home offices or already have this amenity installed and ready. Of course, these numbers will grow even past 2025.

Rural properties

Last but not least we would like to quickly cover rural properties that have been, as of lately, cited as some of the hottest real estate investment opportunities on the market. The driving force behind this trend is similar to a previous couple of examples and comes in the form of a growing number of families that are no longer bound to the expensive, noisy, and crowded downtown areas. Since they now have an option to find their new home whenever they see fit a portion of these people are expected to move to rural and small-town areas that feature excellent prices and better opportunities for family life.

We hope these few examples gave you a general idea about the current state of the contemporary real estate market as well as pointed out some of the lucrative investment opportunities you should keep an eye on in the following period. While it’s true that the real estate market is experiencing some issues the industries like this one are never truly devoid of activity. If you want to keep on pushing, you only need to refocus your assets and pick something better suited to current circumstances. Now, you know where to start.

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