Why Real Estate
The broader equity markets continue to exhibit volatility and expected returns are much lower than in previous years. Real estate has become a particularly attractive asset class in which to invest. In order to reduce the overall volatility of returns, many investment experts are encouraging individuals to include real estate as part of a well-balanced portfolio. Real estate returns are less volatile as they are based on relatively predictable and reliable cash flow streams from tangible assets, whereas the strength of returns in the broader equity market are heavily dependent upon price appreciation/capital gains.
The attractiveness of real estate in general versus public equities and other investment alternatives is based on facts strongly favoring real estate returns. For example, in the last 14 years, the Wilshire Real Estate Investment Trust Index beat the returns for the S&P 500 for 10 of those years. As well, $100 invested in this REIT Index during this period would be worth $626.11 versus only $388.91 if this same amount had been invested in the S&P 500.
Based on stellar long term results, real estate has become a core asset class for institutional investors. This fact is important to high net worth individuals investing in institutional grade real estate, such as that offered by Venterra, as it adds professionalism and liquidity to this large but private investment category. In search of higher yields, it has not gone unnoticed by institutional investors that the total returns of investment grade real estate, as measured by the National Council of Real Estate Investment Fiduciaries (NCREIF), have been negative in only 2 of the past 28 years.
