NMHC RELEASES RESEARCH PROMOTING APARTMENTS TO FOREIGN INVESTORS
WASHINGTON, DC – Foreign investors too often overlook the U.S. apartment industry and the superior returns it has provided, even during recessionary periods, over misunderstandings about how the U.S apartment market functions. That is the conclusion of a new report, A Case for Investing in U.S. Apartments, commissioned by the National Multi Housing Council (NMHC) and produced by Torto Wheaton Research.
"Apartments have a long track record of having the highest risk-adjusted investment returns compared to other property types, and we have proven to be the most resilient during economic downturns," noted Doug Bibby, NMHC President, in releasing the report. "Yet our sector remains largely overlooked by foreign capital."
"For the most part, this is because many foreign investors are unfamiliar with how the U.S. apartment market operates," said Bibby. "Many of these investors come from countries where apartment returns are inferior because the sector is highly regulated and where a greater share of the inventory is subsidized and lower-income. They also lack the professional apartment management firms common in the U.S. They may mistakenly assume the same conditions exist in the U.S."
The NMHC report is designed to help foreign investors better understand the benefits of investing in U.S. apartments by highlighting the key factors that make that a highly liquid asset class with stable cash flows, abundant debt financing and unique diversification benefits.
NMHC is making the new report available to the entire industry and will be working with the Association of Foreign Investors in Real Estate (AFIRE) and leading foreign capital sources to increase their awareness of the benefits of investing in U.S. apartments. The report is available on NMHC's web site at www.nmhc.org/goto/Investment.
Some of the key factors that make U.S. apartments a desirable investment opportunity include:
Of all the major property types, U.S. apartments have provided the highest risk-adjusted long-term returns as well as the smallest amount of variation over the last 10-, 15-, 20-, 25- and 30-year periods.
U.S. apartments have displayed higher returns during times when other property sectors have underperformed, thus bringing diversification benefits to real estate portfolios.
In general, U.S. apartments have less volatile demand than other property types, as well as shorter leasing cycles, with a one-year average lease. Apartment buildings also have a shorter development cycle than other asset sectors, averaging 12 to 14 months. This makes them more able to change prices as market conditions improve and make them less susceptible to overbuilding due to falling demand during a long building cycle.
Based in Washington, DC, NMHC is a national association representing the interests of the larger and most prominent apartment firms in the U.S. NMHC's members are the principal officers of firms engaged in all aspects of the apartment industry, including owners, developers, managers and financiers. Nearly one-third of Americans rent their housing, and more than 14 percent live in a rental apartment. For more information, contact NMHC at 202/974-2300, e-mail the Council at info@nmhc.org, or visit NMHC's web site at www.nmhc.org.