Real Estate investment asset classes: which are the most attractive today?

The real estate sector represents a crucial component for portfolio diversification in the investment realm. Investors can choose among various real estate asset classes, each with its own characteristics, potential returns, and specific risk profiles.

Understanding the features and performance of each of these asset classes is essential to make informed decisions and maximize returns.

The 7 main types of Real Estate properties to invest in

The main real estate investment asset classes include:

• Residential properties, which include single-family homes, apartments, and condominiums. Residential investments are often considered less risky and more stable, as the demand for housing is constant. However, returns can vary based on geographical location and local market conditions.
• Commercial properties, encompassing offices, shops, shopping centers, and other properties used for commercial activities. These real estate assets tend to offer higher returns compared to residential properties but also carry higher risks related to market volatility and changes in consumer behavior.
• Industrial properties, such as warehouses, production plants, distribution centers, and other industrial facilities. This segment has gained increasing interest in recent years, particularly due to the enhancement of Industry 4.0 and new technologies that improve production processes.
• Hospitality properties, including hotels, resorts, and accommodation facilities. Investments in hospitality properties can generate high returns but are particularly sensitive to economic fluctuations and changes in the tourism sector.

• Specialized properties, which include healthcare facilities, senior housing, schools, and other properties with specific community and civic uses. These are generally lucrative investment opportunities, often secured with long-term leases, but they require an in-depth understanding of the relevant sector.
• Student housing, which has gained popularity due to the growing demand for quality accommodation for university students in major European cities. This segment offers interesting returns and relative stability, as the demand for student housing tends to be less affected by economic fluctuations, despite a forced halt during the pandemic period.
• Logistics, including distribution centers and warehouses, is experiencing strong growth fueled by the expansion of e-commerce and the resulting demand for logistics spaces to store goods. Investments in logistics are considered among the most promising due to the constant demand for spaces for supply chain management and goods distribution, both in B2B and B2C.

European market: which real estate investments you should consider among the growing business segments

Each asset class presents specific advantages and risks: the choice of investment depends on the personal preferences of the investor, their individual risk tolerance, and their long-term financial goals. By analyzing current market trends and future forecasts, it is possible to identify the most attractive asset classes suited to one’s portfolio.

Market data can be a valuable tool in selecting the most promising opportunities.

In Italy, according to a recent study by Gabetti Group, in the first half of 2024, investors allocated a total of €3.4 billion to real estate, a 73% increase compared to the €2 billion in the first half of 2023. The strongest asset classes in Italy are offices, which account for 25% of total investments, followed by logistics and retail.

One asset class experiencing exponential growth globally is luxury residential real estate. According to the latest analysis published by Fact.MR, the sector of luxury ready-to-move furnished homes is expected to reach $580 billion by the end of 2024 and exceed $1.173 trillion by the end of 2034. This represents a substantial increase of 102%, with an annual growth rate of 7.3% over the next ten years. This trend, which began in the United States, is now spreading to Europe, particularly in the rapidly expanding Spanish market (+40%). Italy is also following the luxury real estate trend, positioning itself as one of the most attractive countries in the world for premium residences, especially in Lombardy and Tuscany. According to Metastat Insights, the residential luxury real estate sector in Italy will grow to €5.3 billion by 2031.

In Europe, the tourism hospitality sector remains strong: the 2024 Report on the hotel real estate market, presented at the Hospitality Forum 2024, highlights that European hospitality has shown a high capacity for adaptation and resilience, surpassing €47 billion in investments in 2023 despite market difficulties due to the macroeconomic and geopolitical context.

Student housing is also an attractive real estate investment today, particularly growing in areas where the supply of student accommodation is scarce or where international student numbers are increasing. These are residences specifically designed to house students, and they can include a variety of living arrangements, such as shared apartments, studios, or single rooms in facilities with common spaces. Student housing also helps to enhance the surrounding area, as university centers do not necessarily coincide with large metropolises like Milan or Paris. For example, in Italy, there are university hubs such as Pavia, Padua, Perugia, or Trento, while in Europe, Coimbra in Portugal or Brno in the Czech Republic are noteworthy.

The logistics sector is another area of strong growth today, as evidenced by the increasing number of large logistics hubs and warehouses multiplying across the central-northern Italian territory. The shift in consumer habits, the consolidation of e-commerce, and the resulting need for 'last-mile' delivery solutions are among the key factors driving this expansion.

Sustainable construction is a crucial factor in selecting the most attractive asset classes: construction projects focused on the careful selection of eco-friendly materials, new thermal insulation technologies, and energy-saving solutions are growing globally. This trend is driven both by increasing investor awareness and the necessity for builders to comply with increasingly stringent sustainability regulations.

Another key approach in investment choices is the deal-by-deal method, fundamental to our operations at Yeldo, allowing for precise cherry-picking of opportunities to evaluate individually and build a personalized portfolio aligned with one's preferences and values.