Investors can consider this real estate as an inflation hedge

RReal assets have been a preferred hedge against rising inflation, and this is likely to continue for some time as further rate hikes are expected throughout the year.

“With inflation reaching levels not seen in decades, real estate remains an attractive investment option,” reads an article from Realty Biz News. “Inflation has been a major concern for investors for several months and it doesn’t look like it will go away anytime soon. Real estate has always been a solid alternative to the stock market when inflation kicks in.”

Even if rising rates lead to higher borrowing costs via mortgages, this should not affect real estate in the long term. The economic fundamentals of scarcity and localized demand should help support the overall market.

“No one is creating new virgin land. Real estate is always local, which is why land values ​​vary widely between urban and rural settings,” the article adds. “Inflationary prices will be sustained especially in dense urban neighborhoods, where the supply of properties is limited and the lack of land available to build new structures. This is good news for current owners, as real estate demand does not generally fall, even when inflation rises.”

The global real estate market in one fund

Investors do not have to take multiple positions in real estate stocks or own real estate. They can get the global real estate market in an exchange-traded fund (ETF) through the FlexShares Global Quality Real Estate (GQRE) Index Fund.

According to the fund description, GQRE seeks investment results that generally correspond to the price and yield performance of the Northern Trust Global Quality Real Estate Index. The index is designed to reflect the performance of a selection of companies which, taken together, have greater exposure to quality, value and momentum factors than the Northern Trust Global Real Estate Index.

While most of its holdings reside in the United States, investors get that global flair with holdings from other countries. This list includes Japan, Australia, Hong Kong and Canada.

“Investing in the real estate sector offers the opportunity to add growth, diversification, income as well as potential long-term inflation risk protection to a portfolio,” says the FlexShares Fund Focus article. . “We believe that a well-diversified and holistic approach to real estate investing is key to unlocking the full range of these potential benefits.”

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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