Commercial and residential real estate has proven to be an attractive market for high-net-worth investors in recent years.
At the same time, the real estate investment landscape is undergoing significant changes, with new property classes growing in popularity and wealthy real estate investors having a more diverse range of holdings in their portfolios, according to a recent report from Wealth-X, a global information and insight business.
Wealth-X said that its research found that after several years of sustained growth, high-end residential real estate has experienced moderate declines over the past year. Several factors account for the declines, but they may represent a correction toward a stable trend after a period of significant growth.
Commercial real estate investments have also continued to grow, also attended by a moderating trend among high-net-worth investors.
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In these circumstances, how can advisors best serve the needs of wealth real estate investors in the midst of a changing market?
Wealth-X noted that high-net-worth real estate investors approach these purchasing decisions with different investment strategies in mind, and that the investment often involves a range of additional personal and practical factors. “The ability to address these factors will be key to providing valuable guidance and building lasting client relationships,” Wealth-X said in the report.
Many investors, it said, are looking for stable opportunities in core markets and are often seeking to take advantage of the protection against inflation and the beneficial tax treatment real estate affords.
Others want a more active investment vehicle and are willing to put money into secondary markets and in properties with higher spreads. Several key categories have been attracting investment, including office space in West Coast cities, where technology companies are driving growth.