Investors who are wondering whether real estate can be a value play amid all the uncertainty can look to what the industry leaders are saying and whether they feel the worst is over for the sector amid the coronavirus pandemic. So far, the survey says, “Yes.”
Per a GlobeSt.com report, leaders in the real estate sector “predict that the worst of COVID-driven real estate market declines sustained during the first six months this year may be in the rearview mirror, according to a midyear sentiment survey of industry leaders by RCLCO Real Estate Advisors.”
However, that doesn’t mean that all subsectors in real estate will turn around.
“While some sectors have not yet hit bottom, industry leaders surveyed by RCLCO predicted the beginnings of recovery within a year,” the report noted. “Industry leaders predicted that family rental, adult and for-sale residential markets, as well as land, have already hit bottom, although resort and senior housing are still spiraling down, according to the survey.”
One area that investors may want to take note of is the increased reliance on industrial property specifically related to large storage space.
“The survey also highlighted one real estate sector boosted by the onset of the pandemic—the market for industrial space which surged because of an increased demand for big box warehouse, logistics, cold storage and “last-mile distribution” driven by an upsurge in home deliveries and e-commerce sales during the COVID-driven economic shutdown,” the GlobeSt.com article added.
Real Estate Exposure via ETFs
ETF investors looking to cash in on real estate globally can look to fund like the Xtrackers International Real Estate ETF (HAUZ), which seeks investment results that correspond generally to the performance of the iSTOXX Developed and Emerging Markets ex USA PK VN Real Estate Index. iSTOXX Developed and Emerging Markets ex USA PK VN Real Estate Index is a free-float capitalization weighted index that provides exposure to publicly traded real estate securities in countries outside the United States, Pakistan, and Vietnam.
The MSCI All Country World Index (ACWI) ex-USA is a market-capitalization-weighted index designed to provide a broad measure of stock performance throughout the world by tracking the performance of 22 developed and 24 emerging markets.
Another fund to look at is the Vanguard Real Estate ETF (NYSEArca: VNQ). VNQ seeks to provide a high level of income and moderate long-term capital appreciation by tracking the performance of the MSCI US Investable Market Real Estate 25/50 Index that measures the performance of publicly traded equity REITs and other real estate-related investments. VNQ is up 7.26 percent year-to-date, according to Yahoo Finance Performance numbers.
For more market trends, visit the ETF Trends.