When considering investing, the first thing that usually comes to mind is probably the stock market. It’s dynamic and heavily featured everywhere. However, in terms of size it is not the largest asset class. That badge firmly belongs to real estate.
Robust income returns aside, there are many reasons real estate has quickly become the most popular form of everyday investing in our current economic climate. It has the unique ability, bar natural disasters and other anomalies, to stay put and weather economic changes. It simply isn’t going anywhere.
Property is a tangible asset which unlike the stock market, bonds or cryptocurrency, doesn’t require a great degree of specialist knowledge as the workings of buying and selling real estate are relatively easy to understand. It also has that alluring and everlasting appeal of the notion of physical ownership not easily achieved with other investments.
Owning a brick and mortar property or even a portion of it has a different feel to it than numbers going up and down on a computer screen.
According to the Investment Association the property sector has returned an average of 42.3% over the past five years.
With increasing speculation over rising interest rates, as evidenced in several countries recently, investors have been reducing their bond exposure in favour of property.
In addition, recent stock market volatility has seen investors become fearful of committing more money to equities and the focus has returned to lower risk assets with many viewing real estate as a safer alternative. This serves multiple purposes: generating attractive income and protecting yourself in correlation to bond and equity markets.
With any investment it comes down to the bottom line. With brick and mortar the bottom line just happens to have a larger degree of longevity.