I agree with FSD that relative yield could be one of the reasons why investors continue to put money into REITs today. I also agree with Powayseller that if the search for higher yield is the sole reason it may not be wise as REIT investors may one day realize that while they continue to get a good income stream, the value of the underlying is eroding and the extra yield doesn’t cover the loss in capital.
Having said that, the above statement is based on the assumption that the assets held in REITs, i.e. commercial properties, apartments, retail properties will go down in value. And secondly, the corresponding REITs will not trade at a premium to their underlying assets (note that REITs are basically a special type of closed end funds and I have witnessed closed end funds rising in price despite a downward revaluation of its underlying assets).
I think most of us here agree that SFR and Condo prices will go down. Are these other property types in the same camp ?
Other than logical assumptions which we often base our opinion on, has anybody looked at the facts and statistics or have first hand experience (not the anecdotal type) perhaps because you’re in the property industry ? For example, whether these types of properties go down in value when the residential properties declined in previous cycles ?