What’s the Sexiest Real Estate Investment of the Moment?
The Financial Post recently called REIT’s the “sexiest” real estate investment of the moment but are they really a wise buy for Canadian investors or just a seductive money trap? The point the Financial Post was trying to make was that REITs are in demand right now and they have been serving up spicy returns. Some even may consider them more favorable than direct investment into condos due to the management hassle and unforeseen expenses being a DIY landlord brings.
However, what’s really sexier when it comes to real estate investment?
Just higher paper returns today and bleeding it all back tomorrow, or a solid investment offering extended growth and great income, without speculation and which will continue to produce? There are no “ifs, ands or buts” about it, public REITs are fashionable right now, you have to give them that. But that doesn’t necessarily make them great investments, in fact it could signal quite the opposite is true! Public REITs are incredibly volatile; like a twenty something who can’t make up their mind from one moment to the next. In contrast you might be better off holding that vacant condo in Toronto right now. At least it will still be there in the morning, when REITs go pop and you can just wait out the market.
Though instead of having to gamble to get decent returns or just settle out of fear, why not invest in private REITs or partnerships in sound destinations?
Edmonton is about to take off, with an estimated $4-5 billion in new developments in the next 5 years. The population is blossoming, jobs are in great shape, the strong AB economy provides a solid foundation and retail sales are already so good that retailers plan to raise prices next year. If there are any woes elsewhere, they will only make investment returns in Edmonton even better.
In short, retail investments in Edmonton, AB right now may not be as sexy as owning an oceanfront penthouse in Miami Beach or the Fashion District in Toronto, but will likely serve you far better in terms of returns and that is incredibly attractive in a good way.