Real Estate Investment Opportunities for 2017

The real estate market is a very dynamic business environment. It’s influenced by rapid demographic shifts, financial trends and the technological development. One of the reasons why nobody realized the market is going to crash in 2008 was the fact that many real estate professionals back then weren’t able to see the big picture and follow the latest financial trends. Today, with the help of advanced tech, companies have much better insight in the complex real estate market and the factors that influence it on both local and global scale.

Real estate industry trends

In 2017, real estate industry will continue to grow. According to Deloitte’s 2017 Real Estate Outlook, these are some of the trends that will influence the market growth:

  • Homebuilders will be facing a demand-supply mismatch, due to labor shortage and increased housing demands;
  • The private equity real estate will be in decline in 2017 and it will be more difficult for managers to find attractive investments;
  • In 2017, there’ll be more construction spending, especially in the non-residential real estate sector; this trend will slowly increase the prices of commercial and commodity properties;
  • Real estate investment trusts’ earnings will grow in 2017.

Attractive investment opportunities

These trends will affect the investment opportunities in every segment of the real estate market. By using Delotte’s Outlook and several other sources, we tried to predict the best investment opportunities for the next year.

Properties in recently gentrified areas

Gentrification is an ongoing process in many American cities. Gentrified neighborhoods usually have cultural or historic significance. That’s why adaptation, renovation and conservation are the most common construction projects in these areas. These small time projects are easy to implement and don’t require heavy construction machinery and hundreds of workers. Since gentrified neighborhoods quickly become creative hubs of their cities, buying properties in these areas can produce huge returns.

Property rentals

In 2017, the economy will grow at a much smaller rate. Home prices will continue to rise and these market trends will drastically boost the real estate rental business. Many Millennials never believed in the American dream. That’s why they’re very reluctant when they need to take a mortgage and tie themselves to one place for the next 10 or 20 years. A huge student debt that had destroyed their credit rating is another reason, ultimately making rentals the new black on the real estate market. Many young people are not eligible to take bigger loans and are forced to rent houses and apartments in metro areas.

Emerging markets

Various Central American countries are currently experiencing a land boom. Real estate prices in Costa Rica, Mexico and Panama are on the constant rise. Now when dictatorships and drug wars are just a bad memory from the past, it is definitely the right time to buy properties in almost all Central American countries.

When it comes to the United States, the real estate prices will continue to grow in cities in Florida and Texas. Dallas will definitely be the hottest real estate arena in 2017, especially after the announcement of city authorities that they’ll start building a huge park (bigger than Central Park in NYC) in the Downtown area. At the moment, Dallas has the average home price of $233,000 and the 6,3% population growth in the last three years.

In the future, real estate trends will be more defined by technological advancements than by economic and political factors. For example, real estate agents already use drones and augmented and virtual reality software for showing available properties. Sharing economy that’s fueled by the emerging digital trends will redefine the way properties are used. New apartment buildings will have more communal spaces that will be used for cooking, dining and socializing. Renewable energy and new materials are already changing the construction business and these changes will reshape the real estate market in the following years. Hopefully, real estate agencies and banks will be much more careful when selling properties and issuing loans and big market crashes, like the one from 2008, won’t happen again.

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