The following post is courtesy of Diane Harrison who is principal and owner of Panegyric Marketing, a strategic marketing communications firm founded in 2002 specializing in alternative assets.
This won’t be a technical analysis about real estate projections- what sectors are hot, which are not, where to put your investment dollars and why, etc. There is plenty of information and data out there to support almost any angle on real estate investing if you want to look for it. Rather, since investors are first people, and appealing to their mindset about investing is crucial to winning the sale, this is more about why the demographic hoards are shifting geographically and how that piece of the story can impact your ability to win investors to your viewpoint.
People of all sorts are impacted by housing issues, and there’s a strong component of emotionality to investing in real estate. For investment managers who run real estate portfolios, having some aspect of your sales pitch focus in on what emotional drivers influence your potential investors can assist in selling your whole investment approach to them if you can capture their feelings about what the current climate is in their experience. Whether your investment fund is a buy or a sell strategy, some of the observations you might weave into your explanation of the approach to real estate and how you as a manager are prepared to capitalize on a real estate holdings fund follow.
COASTAL MIGRATION
Between poor local policy and governance issues and a series of unfortunate climate events- hurricanes, flooding, windstorms, and the like, for the first time in a long time, people are seeking to move AWAY from formerly popular east and west coast regions. California and Florida both used to be a ‘pull to’ destination, but rising costs for insurance and housing have made these places less desirable than in previous years.
URBAN DECAY
America’s largest cities are languishing under a poor outlook for sustainable growth and vitality. While there are many reasons for this, the general result for population centers is that urban workforce numbers are diminishing in favor of suburban migration, and the tax bases and dynamic draws of our largest cities have been eroding for some time. The current mayoral race in NYC, where a socialist/communist candidate is a frontrunner, has major corporations and the wealthy resident community in near panic. Should that candidate win the mayor’s seat, NY will see a mass exodus of tax revenue in the form of departing companies and individuals the likes of which that city has never seen. Chicago, LA, San Francisco, and others may not be far behind a similar fate should NYC fall into such a radical shift.
TAXES, TARIFFS, AND TRADE
With the US flexing its considerable muscle on the global stage as regards to trade, people are naturally wondering how the cost of goods, the domestic manufacturing of goods, and the resulting labor demands and housing demographics will be impacted. While it’s too early to tell much, it will pay to watch closely where new manufacturing deals will be struck and how that influences the local landscape.
These are just a few of the emotional hot buttons that investors in general are concerned about, and how their particular investment plans may be impacted. Managers who can support their understanding of what some of these drivers mean and explain how their investment strategy is able to navigate and capitalize on their impact may find a receptive ear from worried individuals looking for some clarity.
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