Niche investments in real estate | KPMG | US

Opportunities for alpha

Opportunities for alpha, real estate trends

Niche investments in real estate

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Alternative investors have always had an allocation of their dollars to real estate, but uncertainties affecting financial, geopolitical, and regulatory directions may create challenges for investors to find deals through 2017 and beyond.

Even with headwinds created by some of the uncertainties, alternative investors may find ways to create alpha. We suggest that, because prices are lofty for some core real estate assets, such as retail, office, industrial, and hospitality in major markets, in order to find alpha, alternative investors may need to look where fewer investors are looking: niche investments in real estate.

Specifically, the niche sectors of student housing, storage facilities, data centers, single-family rental properties, and senior housing may bode well for them, particularly if they are in strong secondary markets that have good job growth.

But, finding value in the niche arena is not always easy and requires rigorous due diligence to create alpha in this complex investment environment. Still, we suggest that those willing to look beyond the four major sectors and use new tools to root through rich trend and demographic data sets may be rewarded.

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