Millionaires in the United States of America are looking to invest in Real Estate as an alternative-asset to own. It seems that approximately 77 percent of those that currently own over $1 million have real estate of some sort. According to a survey by a New York Investment Bank Wealth Management sector, ownership of commercial real estate or residential properties climbed to the top of the charts at Number 1 for 2014. One third of the millionaires that were surveyed stated they plan to purchase property this year, where as Twenty Three percent stated that they were going to invest in real estate investment trusts. The two stood out as the top two choices on the survey for 2014.
As the Monroe commercial real estate market begins to rebound, investors are drawn to the low fixed-income yields even as equities begin to sky rocket. In the past twelve months alone, commercial real estate rose 8 percent and has jumped a staggering 71 percent since they hit the rock bottom in 2009. Even on the residential side, we have seen a 24 percent increase from the 2012 low in 20 surveyed cities.
“After a year where the Standard & Poor’s Index rose 30 percent, some millionaires are moving money out of traditional, long-only strategies to find outperformance, and turning toward alternatives such as real estate and private equity,” stated Vice Chairman of Morgan Stanley Wealth Management, Gary Kaminsky. “Sophisticated, high-net-worth investors are much more concerned about losses.”
As stocks begin to increase in price, most investors are noticing that the rising interest rates are beginning to remain stable with the potential to decrease substantially over the next few years. Tiger 21 members, those that have at the least $10 million in investable assets, increased their real estate investments to 21 percent in the final fourth quarter, up from 19 percent in the other three from 2013.
Another immediate increase in commercial real estate was seen this year by foreign buyers. We even have seen the investment in the Manhattan condos One57 and 432 Park Ave. for a little over $90 Million. These large scale investments are just another notion that foreign investors are serious when it comes to the rising United States real estate market. “It creates competition, which drives the price up for everybody,” stated Mitchell Roschelle, advisory leader at Pricewaterhouse Coopers LLP. “The sellers have multiple channels to sell into. That gives you more liquidity.”
As 2014 rolls along though, we would not be shocked to see more individuals jumping in the commercial real estate investing game. With lower prices, relatively low interest rates and the opportunity at a very high reward, now seems like the ideal time to invest.