Blackstone investing huge in residential real estate

U.S. residential real estate investing has become big business and news of further investments is on the rise. Individual investors can still benefit from advanced tools as more and more technology companies level the playing field.

Residential real estate is arguably the most valuable and accessible segment of real estate asset class. Its popularity has driven a disproportionate amount of capital into residential real estate — particularly from institutional funds — pushing up valuations and pushing yields lower.

Real estate investment giants continue to buy up homes — something that is likely here to stay, even with higher mortgage rates. In fact, Blackstone is close to finalizing what could be the biggest traditional private-equity real estate investment fund in history, according to the Wall Street Journal.

In a regulatory filing last month, Blackstone said that it has secured $24.1 billion of commitments for its latest real estate fund called Blackstone Real Estate Partners X. Combined with Blackstone’s real estate funds in Asia and Europe, the company will have over $50 billion available for opportunistic investments.

In the event of a market downturn, Blackstone will have plenty of capital to scoop up some attractive real estate bargains.

But earning a good yield isn’t easy in today’s economic climate. The gross rental yield for a typical New York apartment is just 2.9 per cent. The dividend yield on residential REITs is also mediocre.

Low single-digit yields are tough to swallow in an environment where interest rates are rising and inflation is at 9.1 per cent.

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