In addition to dividing the private and public markets, Vision believes that investors should do the same in terms of property types and regions. There were clear winners and losers in the real estate market during the pandemic, but the general backdrop is good, added Olin.
“Despite the rise in interest rates, the spread between returns on investments in REITs and investment-grade bonds has been nearly double the long-term trends,” Olin said. “And when there is little or no money to be made from bonds, the thirst in the private real estate market is extraordinary.
“According to Citi, Blackstone, Brookfield, is raising $ 345 billion in dry powder to pension funds that are increasing their weight on real estate from five to 10 percent to 15 percent to 20 percent. Private equity funds that have been fully funded want to invest in real estate. This is a very good setting for the public markets. “
To illustrate his point, Olin highlighted Vision’s involvement with Blackstone in an investment in Tricon, which is primarily focused on single-family homes, and Blackstone’s partnership with Goldman Sachs to buy Extended Stay America as an opportunity in the public markets.
In the meantime, COVID-19 has affected various market segments. One of the biggest winners was single-family homes, with many of the factors that added to its attractiveness that was there before the pandemic. However, because of remote working, people are now moving away from homes and public areas. Now it’s possible to move out of town and get a back yard, garage, and space to work or home-school the kids.