I used to find real estate boring. Compared to the world of say… tech investments. Renewable energy. Advances in healthcare. Entertainment. All these other sectors seem more colourful, with more potential for evolution compared to real estate.
Buildings. Concrete. Steel. Glass.
How could these compare to the abovementioned industries? A hundred years from now, buildings and real estate would still pretty much remain the same - well, they might look different (no one builds houses in the Dutch Baroque architectural style anymore - well, perhaps rich barons without any ROI requirements - side note, if you know anyone like that with spare capital to invest, please drop me an email).
"Well Reginald, we like the real estate. We just can't find a way to get anything higher than a 1.5% IRR at best. And.. replacement costs are pretty killer. "
But people will still be talking about the same things that separate good real estate from the bad. Location. Quality of construction materials. Layout. Presence of natural light. Ceiling heights. Concepts.
On the other hand, disruptions in other fields might be so advanced that current day issues might start to be referenced as distinct remnants of the past, eliciting the same responses of ridicule and nostalgia as items like the pocket pager or the 56k modem. “Remember when cancer was a thing? My goodness, that was horrendous.” Or perhaps, “Remember when our grandparents used to consume content on televisions? What an interesting concept.”
Somehow though, despite my desire to be involved in any of the “sexier” industries, I was lucky to find myself thrust into the world of commercial real estate from my very first job as a banker. I joined my bank’s CRE team. Back then, the CRE team was among the most dynamic groups within the bank. It was in the early 2010s, and the Asian REIT markets were in full swing. Low interest rates, a growing appreciation for the REIT product and its wonderful tax efficient structure, and an ever insatiable appetite by Asian investors for real estate as an investment product ensured a whole slew of deals. Opportunity and money were there for the taking.
Since then, I’ve had the good fortune to work on multiple real estate deals, both as a banker but also as an investor. And with that, the opportunity to learn so much about CRE. Over time, my view of CRE has gradually matured. Yes it’s not as susceptible to disruption or perhaps as evolutionary as something like electric vehicles, it’s a timeless asset class that will always affect people’s lives. Living spaces, working spaces, recreational spaces - our built environments have a massive impact on the way we operate day to day and interact with each other. And while it’s simple to understand, there is also a huge amount of nuance involved in understanding what makes a good CRE investment.
It’s safe to say that I’ve grown to love the asset class. Hence, I created this platform to talk (and perhaps gush at times) about CRE.
Buildings can be sexy too.
Here, you will also find financial models that I have created to analyse different investments. The models are made as simply as possible, to help you focus on the key aspects that make a financially successful real estate investment.
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