As in all broad asset classes, residential is broken down into various sub-segments. In this asset class, the segmentation is even more pronounced than in others. The most commercial segment of residential is multi-family assets which can vary from traditional apartment buildings to low-rise developments. However, single family homes, traditionally not financial investment class have been grouped into portfolios by aggregator funds since the credit crisis of 2008. Mixed use residential, retail, office, is a growing trend as the millennial generation increasingly prefers rental communities with amenities and pedestrian accessibility. This trend blurs the segmentation between residential and other sectors and is creating more demand for urban and semi-urban housing.


Residential investments are also highly varied in investment types. Green field developments and brown field redevelopments are at one end of the spectrum, and stabilized acquisitions at the other. In between there is a range of repositioning and core plus investments, and conversion from rental to condominium sales possible which vary as much as the product type and the market in which the project is located. And, of course, the range of pricing from low income to ultra-high luxury product is extreme. Residential markets are also affected by many factors, and more so than other sectors. These factors include demographic trends, development of other real estate asset classes which create consumption and employment options, transportation infrastructure, to name a few. Residential properties can also have a more accentuated pricing cycle than other classes. All this creates both opportunities and risk, for which experienced operators are essential to source and manage projects with desired risk / return characteristics.


© 2014 TRX Investments. All rights Reserved.