It's a poor point in the cycle to start investing in real estate.
The current problem is that NOI yields are extremely low, driven by the low interest rate environment. In a rising interest rate environment, you should expect the NOI yield to increase hence putting your equity at risk.
However, it will still be possible to generate ALPA:
The current problem is that NOI yields are extremely low, driven by the low interest rate environment. In a rising interest rate environment, you should expect the NOI yield to increase hence putting your equity at risk.
However, it will still be possible to generate ALPA:
- Refurbishment
- Choosing regeneration areas
- Tenant arbitrage (i.e. vacant or occupied by low-quality tenant > bring in high quality tenant and the NOI yield reduces, thus increasing capital value at similar rent)