Diversification and real estate are both critical aspects to the portfolios of many wealthy billionaires. We breakdown some of the most successful investors and see how we can mirror their success.
Consistently ranked as one of the wealthiest billionaires in the world, Buffett continues to point to real estate as his best personal wealth building investments. His companies have been heavily invested in real estate for decades and Berkshire Hathaway has one of the most diverse portfolios in existence.
Few entrepreneurs have been as diversified or branded as Sir Richard Branson. His ventures cover music, airlines, mobile phones, internet services and space travel. He also owns some of the most coveted real estate in the world. His private Necker Island resort is rented to celebrities such as Mariah Carey.
Paypal co-founder Peter Thiel has used his billions to invest in a variety of startups including Facebook and Lyft. He has also been in the news for multi-million dollar prime real estate purchases and has even pioneered a new approach to effectively forming his own country in the Blueseed project.
Coach, author, and philanthropist Tony Robbins is well known for feeding millions in need each year. In addition to having one of the most revered reputations in retail over decades, Robbins new book ‘Money’ highlights the need for increased portfolio diversification.
Summary: Diversification, Diversification, Diversification
Clearly there is a unique apex where all of these wealthy individuals converge. Those that desire to see similar results for their investments could find the best opportunity to recreate these gains by diversifying their investment portfolio.
According to the Edmonton Journal, the conversion of the Stanley Milner Library is going to be monumental. But not everyone seems to be happy about the $61.5 million revitalizing renovation, even if it will set the building apart from everything else in the city.
Some locals have used social media to point out complaints, including the expense and darker side of the library, which has spurred volunteers to donate close to $10 million to help fund the project.
A stunning new library, being both functional and architecturally appealing can say a lot about the city. Investing in infrastructure, committing to lasting upgrades and balancing aesthetics with needed services, can serve multiple generations.
For private real estate investors, this project supports Edmonton becoming a favourite for global investors, designers and businesses. It also demonstrates that not only are there current growth opportunities for commercial real estate investors, but the city should maintain its star status over the long run.
While local shopping plazas in the province are already performing well for commercial property investors, this suggests current yields will only be complimented by increased income yields and blossoming equity. This is even truer for those using leverage, diversifying into multiple projects and locking in low long-term rates.
There are always changing trends affecting the Canadian investor’s portfolio. With 2014 coming to an end, here are three of the biggest trends we think that will continue impacting investors in 2015.
Current trends in oil prices and the pipeline vote don’t appear to bode well for the Canadian industrial property sector. Even though a weaker dollar might compound the impact, oil prices are highly volatile and Canada’s embracing of renewable energy promises to keep industry strong.
Canadian Housing Market
According to a new report from the Bank of Canada, house prices may be overvalued by as much as 30 per cent. The residential housing sector appears to remain the top concern of leaders of the Canadian financial system.
Many believe that Canada’s strong employment and rising wages will continue to help the nation’s housing market negate potential downfalls. However, pessimistic reports like this and other media reports can also impact the market, just as has happened during the US housing crash of 2006.
Rising Demand for Canadian Office and Retail Space
The battle for retail and office space continues to heat up. This continues to be especially true in Edmonton, where many global retailers are choosing as their first forays into Canada, while a plethora of local startups are maturing to the point of needing a local physical presence.
This trend has strengthened the performance of retail properties and is responsible for strengthening rent rates, occupancy, yields and property values.
The convergence of these recent trends highlights the advantages of commercial real estate investments. For example, smaller retail plazas offer plenty of opportunities for private investors, as they provide basic needs of consumers and are proven to be frequented in all market cycles by both renters and owners.
In Dec. 2014, Globe and Mail highlighted the biggest challenges facing Canadian investors today: providing for their children, securing income and financing for retirement.
It can be a tightrope walk for many Canadians trying to find a balance between financing for the present, for their children’s future and their own retirement plans.
Fortunately, there are avenues to help reduce the stress, allowing families to target all areas at the same time. Investing is a great option to take, especially in commercial real estate. This underlying hard asset provides security, as well as financial provision.
Sound commercial property investments can put retirement saving on autopilot. Often these investments provide stable and passive income, and when paired with third-party partnerships, they require minimal effort.
Many Canadians have found their investments and portfolios have bounced back since the last economic slowdown and have performed well in 2014. But with the year drawing to a close, and foreseeable changes happening already, here are some areas Canadians should look at to best prepare their investment portfolios for 2015.
Getting into the habit of reviewing your portfolio annually can be beneficial. Not only can you adjust to upcoming changes for the year, it also allows you to stay engaged and updated.
Here are some important questions to ask before the end of the year:
- How have your current investments performed this year compared to previous years?
- How are your investments performing in terms of desired goals?
- What are the projected performances of your investments in the next 5 years?
- Are there any emerging trends that can affect or alter your investments in the next year?
- What are your investment goals next year? In 5, 10 and 30 years?
Like any business, financial moves need to be reviewed, strategized and re-strategized to ensure the rewards outweigh the risks.
The latest commercial real estate statistics suggest that less capital was invested in the first half of 2014 than the previous year. Furthermore, the value of Canadian commercial real estate transactions dipped by 10 per cent in the first half of 2014.
Is Canadian commercial property on the decline?
The simple answer is no. While the numbers might show a dip, the figures don’t actually reflect any lack of liquidity in capital markets or demand. Rather, the numbers reflect the tightness of commercial income property inventory available in Canada. A combination of current landlords choosing to hold onto their investments long-term, in order to retain top yields and value, and private Canadian investors moving to snap up deals. In fact, individual investors have reportedly beaten out large funds in investing in Canadian properties in 2014.
So if Canadian commercial real estate is still on the way up and is a great investment, where are the best opportunities for individual investors?
Here are 4 Canadian commercial real estate trends and opportunities to watch out for:
- Retrofitting and redeveloping properties to increase value
- Retail and shopping plazas are still expanding
- Edmonton, Alberta is a rising star
- Partnership opportunities for diversification and professional asset management
Contrary to some potential misinterpretation of the numbers; Canadian commercial real estate is alive and kicking. The key is finding the right opportunities among the above four categories.
ReDev Properties Ltd is proud to celebrate the opening of Radiant Sports Physiotherapy Ltd. as our newest tenant at MacEwan Shopping Centre, Calgary Alberta.
Commencing in Dec 2014, Radiant Sports Physiotherapy will begin their 6 year lease with ReDev Properties Ltd, occupying an 887 square feet unit.
“I’m delighted to welcome Radiant Physiotherapy to the ReDev family. They’ll be a great fit and addition to the shopping plaza, adding to a strong list of service tenants we already have.”
Radiant Sports Physiotherapy is an independently owned, Calgary-based rehabilitation and physiotherapy clinic. They are dedicated to improving and enhancing independence physical performance from each client.
As the media continues to debate the dilemma of Millennials and home purchasing, many young Canadian adults are finding homeownership becoming less of a priority to their future financial security.
For decades, homeownership has been considered the stronghold of financial security in North America. However, that time may be passing. In some places homeownership rates are dropping, and some worry the number of people disregarding the benefits of homeownership are increasing rapidly. Due to major pivots in the investment world and easier access to commercial real estate investing, some are arguing that the renting versus owning a home debate doesn’t even matter anymore.
Canadian home prices continue to rise in strong economic cities like Edmonton and Calgary. Eventually interest rates will follow suit. This has many analysts and Canadian real estate agents suggesting Millennials really can’t afford to wait to buy homes. This position is also compounded by escalating rental prices in top cities.
However, researches are suggesting Generation Y may place less emphasizes on homeownership compared to their preceding generations. Recent surveys show they like the idea of owning a single-family home in the suburbs, but there are other priorities that top the list first. For example, they’d prefer to share vehicles rather than own their own and invest their finances in owning gardening plots and businesses over a house.
There is far more for Canadians to glean from their holiday shopping trips than another present to tuck under the tree. In fact, if commercial property investors keep an eye out, they’ll find many insights that will fuel their financial success and portfolio performance for the year ahead.
Type of Tenants
One of the easiest takeaways while shopping this holiday season is to pay attention to which stores, brands, products and services are constantly busy and which are not. This can provide insight as to which type of tenants will make good additions to current retail spaces.
Types of Shoppers
Observing how people shop and navigate through shopping centres can provide another level of insight. This can indicator how potential commercial property acquisitions will perform and what changes or improvements can be made to retail properties to increase performance.
Type of Properties
Another area to pay attention to is which shopping centres are bringing in the crowds. Large regional malls will certainly see an increase in traffic, however, local shopping plazas could be equally as busy.
Holiday seasons can be highly profitable and beneficial for investors. The next time you’re out shopping, take a look around and you might find great property investments.
According to recent trends, 2015 is shaping up to be an exciting, active and a pivotal year for Canadians financially. Whether you are new to investing or an experienced investor with a well-performing portfolio, here are five investing moves to consider for 2015.
1. Invest in Real Estate
As stocks, technology, and even REITs continue to tip-toe on a high wire, continuing to invest in bricks and mortar, specifically via direct investments can help balance your portfolio, bringing tangible and steady confidence.
Building on diversification remains critical. Get diversified and where possible, ensure each sector and asset you are invested in has further built in diversity through multiple properties, units or tenants.
3. Invest in Retail
Retail, in particular physical retail is making a big come back. Currently, retail remains significantly undervalued and is more versatile than industrial, manufacturing, office and residential homes.
4. Invest for Income
No matter which stage you are in, investing for income is important. For most investors it may prove far more important and essential than net worth over the long run.
5. Invest in Alberta
Of all Canadian destinations right now, Alberta stands out as a top choice for value, growth and potential.