Alternative Investment: Outlook On Real Estate ETFs; Is The Worst Over?

Real estate industry leaders concur that some of its sectors may have bottomed.

A report by Globe St. com quoted a survey result by RCLCO Real Estate Advisors. The survey said that real estate industry leaders thought the worst of COVID-driven real estate market declines sustained during the first six months this year may be behind us. (ETF Trends)

The RCLCO Mid-Year 2020 Sentiment Survey

The key observations from the survey are:

  • the worst of the declines are over, though some sectors still face headwinds
  • only 16% of industry leaders think that real estate markets will be “significantly” worse in the coming year
  • land, multifamily rental, active adult, and for-sale residential sectors have bottomed out
  • second home/resort and seniors housing are still in a decided decline
  • the hospitality sector is at or near the bottom
  • luxury and resort hotels are either in full decline or are bottoming out
  • the retail sector is in full decline
  • office market still in decline
  • COVID 19 has given a bullish thrust to industrial spaces such as cold storage and last-mile warehousing due to demand for deliveries
  • except for industrial spaces, every major real estate sector jumped from expansion to contraction in the first half of 2020

The silver lining according to the survey is that respondents expect conditions to improve significantly over the next 12 months.

Real Estate ETFs

Given that industry leaders are cautiously bullish as per RCLCO, the following ETFs offer real estate exposure.

Symbol Name of ETF AUM – July 7 – USD YTD
VNQ Vanguard Real Estate Index Fund $28,020,331.65 -14.04%
SCHH Schwab US REIT ETF $4,233,072.46 -22.83%
XLRE Real Estate Select Sector SPDR Fund $4,028,072.74 -7.91%
IYR iShares U.S. Real Estate ETF $2,976,170.15 -14.04%

 Related Story:   Kayne Anderson Raising $2 Billion for Sixth Fund                                                 

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