It’s difficult to play real estate right now because on one hand, it looks tempting given the low rates, but with social distancing measures still in place and remote networking becoming even more of the norm, what will the space look like and what’s the best way to invest right now?
In a Forbes article, Ingo Winzer stressed the importance of keeping in mind that the COVID-19 pandemic shouldn’t be the driving force of real estate investment decisions.
“We have to start with the belief that the current situation is temporary, that economic activity will resume over the next year or so, and that most jobs will eventually return. If that’s not the case (remember, the virus is in charge, not us – as Dr. Fauci says) you might as well keep your money in the bank because we’ll have a long slide in real estate values,” wrote Winzer.
“But assuming that most jobs will return and that we won’t see a wave of home sales by desperate owners, there are other ways to figure out where and how an investment makes the most sense – and with the least risk,” he added.
Winzer cited due diligence options when considering real estate, such as looking at certain cities prior to the pandemic as well as assessing how the local markets have reacted to the recessionary pressure due to the virus. To read, Winzer’s strategy, read the article here.
If investors don’t want to actually own real estate, but still want industry exposure, they can also use exchange-traded funds (ETFs). ETFs allow investors to add real estate to their portfolios for diversification purposes and to reap income in certain real estate investment trust (REIT) ETFs.
Here are a couple of real estate ETFs to look at:
- FlexShares Global Quality Real Estate Index Fund (GQRE ): seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust Global Quality Real Estate IndexSM. The index is designed to reflect the performance of a selection of companies that, in aggregate, possess greater exposure to quality, value, and momentum factors relative to the Northern Trust Global Real Estate Index.
- FlexShares Real Assets Allocation Index Fund (ASET ): seeks investment results that correspond generally to the price and yield performance of the Northern Trust Real Assets Allocation IndexSM. The underlying index measures the performance of an optimized allocation to the underlying funds that is intended to provide exposures to certain real assets and minimize the overall volatility of an investment in the underlying funds.