We\u2019re all aware that the COVID-19 pandemic has significantly impacted real estate investments\u2014it\u2019s a reality many of us face on a daily basis. As a result, many investors have been forced to change their real estate investing strategies<\/a> to deal with the economic effects of the crisis.\u00a0<\/p>\n And, investors are also facing new challenges as the country emerges from lockdown restrictions. One of the biggest challenges right now is soaring inflation rates. According to Trading Economics<\/a>, the inflation rate hit 7.5% in January 2022\u2014the highest inflation rate in 40 years. Adding to the issue is the fact that energy costs are skyrocketing\u2014and there is a widespread labor shortage to contend with as well.\u00a0<\/p>\n So how are these economic trends affecting real estate investing strategies? And after the country shakes off the shackles of COVID restrictions, what do these trends\u2014and the subsequent strategy shakeups\u2014mean for property investment, especially in the rental property market? Well, while it\u2019s not entirely clear what will happen to the real estate market post-pandemic, the good news is that investing in real estate post-COVID will almost certainly be a good idea. Here\u2019s why that is\u2014and information on what types of real estate investments may be a good idea after the coronavirus pandemic is over.<\/p>\n The pandemic brought many uncertainties with it\u2014and not just for investors. With shelter-at-home orders in force throughout the country, many people were confined to their homes, unable to go to the office, visit friends or family, make a quick trip to the grocery store, or take their planned vacations. <\/p>\n And, many people lost their jobs or saw significant decreases in income, which meant that rent was tough to pay for many tenants. To help avoid another economic crisis, eviction control measures were introduced on the federal level. These measures were meant to help renters avoid being evicted from their rental units.\u00a0<\/p>\n In turn, open units were a scarcity. According to a 2021 report<\/a> on the pandemic\u2019s effect on the U.S. rental market, rental listings were 26% lower in the first half of 2020 than they were just one year prior. Home sales transactions in large metropolitan areas also fell by 50%\u2014and average sale prices declined by 18%.<\/p>\n And, according to some analysts, there were certain real estate investment market sectors were hit harder than others. For example, investment in senior care facilities, hotels, and gas- and oil-related properties posed a greater risk to investors than residential properties, and the sales data is evidence of these issues.\u00a0This was almost certainly due to the uncertainty plaguing certain industries, like travel, at the height of the pandemic, but it had a big impact on how investors chose properties.<\/p>\n Much of the pressure on these industries has decreased significantly in the time since, but questions remain as to what the real estate investment world will look like after the pandemic is over. It also begs the question of what the best types of real estate investments will be at that point. While it\u2019s difficult to predict what exactly will happen, there are a few real estate trends that may be worth keeping an eye on in a post-pandemic world.<\/p>\n What types of real estate investments have the potential to excel in 2022? And what are the trends to look out for as the country recovers from the pandemic? Here\u2019s what you should know.<\/p>\n Despite eviction moratoriums, multifamily properties performed relatively well during the pandemic. At the height of the pandemic, many tenants received rental aid assistance and direct aid to pay monthly rent\u2014which kept these types of investments appealing to savvy investors\u2014and rental units have remained in very high demand in the time since. <\/p>\n Also, many landlords worked out payment plans with tenants to ensure that they continued to receive rent, and this also kept the rental market tight with few evictions. Furthermore, the ban on evictions didn\u2019t wipe the slate clean with rent debts, so landlords who did not receive rent during that time will still be able to collect the rent they are owed from tenants.\u00a0<\/p>\n This is a good sign of what\u2019s to come for multifamily units, as these investments weathered the tough times and are now incredibly lucrative for the right investor. And, it\u2019s likely that these types of real estate investments will remain strong post-pandemic, too. <\/p>\n There were mixed fortunes for owners of office and retail properties during the pandemic. Many offices were deserted as people were forced to work from home. There was talk that investment in office space would never recover. <\/p>\n However, the complete shift to working from home never happened\u2014and it appears unlikely that it will. As such, office and retail properties are likely to be a good investment in a post-pandemic world, as the demand will likely be higher than once expected. <\/p>\n Another good sign? Retail properties stabilized as stores were able to open and resume trading during the last quarter of 2021\u2014and will likely continue that trend throughout 2022.\u00a0<\/p>\n Related: <\/em><\/strong>A beginner\u2019s guide to investing in office buildings<\/a>.<\/p>\n During the pandemic, some of the best real estate investments in the commercial real estate sector were those connected with logistics and shipping. One of the main reasons for this was that e-commerce businesses were doing more business than ever thanks to an uptick in online shopping, and, in turn, needed a lot more storage and shipping space. <\/p>\n Many analysts say that the demand will remain high for commercial properties thanks to continued growth in e-commerce\u2014which had been occurring well before the pandemic. The lack of in-store shopping options simply added more fuel to an already burning fire.<\/p>\n While industry experts agree that the pandemic affected real estate investment strategies, real estate and property investment remain a target for many investors. We\u2019re already seeing positive trends in the first few months of 2022, including:<\/p>\n Right now, many real estate assets require repurposing and redevelopment due to the changing landscape. This is requiring investors to have robust strategies that allow them to understand the core aspects of their investment targets. In most cases, this means they are gaining access to data-driven analysis and in-depth marketplace insights\u2014which helps to heavily inform their strategies.\u00a0<\/p>\n For example, one thing that the pandemic made clear is that rental property owners need to make analyzing tenant risk profiles a top priority to avoid losses whenever possible. After all, there was a potential for a crisis in the rental market at the start of the pandemic\u2014which could have caused huge problems for many investors. <\/p>\n However, a surprising number of renters kept on top of rent payments\u2014likely due to landlords and investors doing their due diligence on potential tenants. Thorough screening remains one of the best ways to protect your investment assets\u2014and given the uncertainty of the future, will likely remain a trend in real estate for some time.<\/p>\n The demand for office space is increasing as workers return to the office. However, commercial tenants now want flexible workspaces because hybrid models have become the norm. This requires repurposing existing office space to make it more accessible for hybrid work, which requires room for collaboration and meeting spaces. It may also require commercial property owners to redevelop office space with flexibility in mind.<\/p>\n Sustainability and ESG are becoming priorities when commercial tenants are looking for new space. In addition, corporate clients must provide their socially-conscious investors with guarantees about operating sustainable businesses, which means there\u2019s even more demand for these types of spaces. And, with many cities having ambitious net-zero emission targets, the demand for energy efficiency, cool roofs, and reducing wastewater continues to increase as well.\u00a0<\/p>\n The COVID-19 pandemic forced many investors, property owners, and tenants to rethink how they use technology.\u00a0For example, many residential landlords switched to online rent payment and collection methods<\/a>. They arranged virtual tours for potential tenants and started using e-signatures on electronic documents. In turn, landlords found that these new technologies helped to streamline their rental businesses<\/a>.\u00a0<\/p>\nThe effects of COVID-19 on the rental property market<\/h2>\n
3 real estate investment trends to watch for after the pandemic<\/h2>\n
1. Real estate investment in rental properties will likely remain strong.<\/h3>\n
2. Commercial real estate will continue to recover.<\/h3>\n
3. Industrial real estate investments will remain strong.<\/h3>\n
Other notable real estate investment trends in 2022<\/h2>\n
A shift in investment strategies<\/h3>\n
Demand for flexible spaces<\/h3>\n
Environmental, social, and governance (ESG) is a top priority<\/h3>\n
Technology informs the way buildings operate\u00a0<\/h3>\n
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