It’s not just ‘location, location, location’ that matters with regard to real estate investing. Property type has quickly become equally as important. Those real estate investment trusts (REITs) that have focused on key property sectors have continued to do well and bring up the entire sector’s returns, helping to turn the struggling real estate sector around last year.
But REIT investors may not want to cheer just yet. Cracks are beginning to form in the strongest of real estate industries.
A glut of apartments and warehouses are starting to seriously hurt many of the top property owner’s returns, with several key REITs seeing dwindling fund flow from operations (FFO) metrics. For investors, it’s a cautionary tale that the real estate sector still has plenty of risk.
