Commercial Real Estate Investment May Be Seen As Sound Hedge Against Inflation Worries

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This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investing advice.

You don’t have to look further than your local gas pump, grocery or big box store to know that inflation in the U.S. is cutting into income and investments. 

The inflation level has been ranging from 2% to 5%, lowering the value of cash savings and fixed-income investments.  

One asset that could provide a hedge against inflation is property ownership. According to the Massachusetts Institute of Technology Department of Economics, retail and apartment properties are inflation hedges. 

Investors looking at the financial markets have not seen consistent security. With inflation causing considerable shifts in both stocks and cryptocurrency values and Russia’s invasion of Ukraine leading to global tension, the stock market has been a wild ride in 2022. 

Investors sometimes depend on residential property to balance a portfolio. According to Zillow Group Inc. ZG, the U.S. real estate market was estimated at around $49.3 trillion in 2018. The residential market represented $33.3 trillion of that total and the commercial market $16 trillion. Total equity capitalization in the U.S. stock market stood at $30.4 trillion.

While there are many pros and cons related to real estate investing in the private and public sectors, the low volatility of real estate investment can sometimes give an edge over the market.

According to a Stanford University study, residential real estate is historically an investment safe haven during inflationary periods. The study also found that with the inflation of the 1970s, home prices increased relative to the size of the economy.

“Owners of residential and commercial real estate are often better off during rapid inflation than owners of stocks or bonds, economists say,” according to a report by  News Corp.’s NWSA Wall Street Journal. “Office, retail and apartment rents are typically tied to consumer prices and rise with inflation, pushing up property income. Inflation also makes construction more expensive, which benefits property owners because they can expect less competition from new buildings.”

The bottom line of this investment scenario is that real estate investment may be able to help diversify your portfolio while hedging your risk against the stock market. This makes real estate a potentially safer investment option than a continually volatile stock market. The risk of putting your own money to invest can also be minimized as real estate offers multiple financing options. Investors have also traditionally financed their real estate purchases by applying for a loan.

JPMorgan Chase & Co. JPM predicts that the year ahead looks positive, with retail and multifamily asset classes rebounding and industrial thriving. The company also points to commercial real estate finding innovative ways to increase the affordable and workforce housing supply. 

There are also new and innovative ways to invest in commercial real estate. Among them is AKRU, a platform that says you can securely and efficiently invest in premium fractionalized real estate assets for as little as $1,000.  

Cincinnati-based AKRU reports that it combines proprietary blockchain technology with extensive industry knowledge to allow investors to diversify their portfolios with enhanced control and liquidity easily. 

AKRU CEO and Founder Mohsin Masud told Cincinnati Future what he believes makes his company unique. “Some of the biggest differentiators between us and crowdfunding platforms is the fact that we’re not just doing initial offerings. We make available a secondary market, which is key because that will potentially enable investors to add liquidity to a more illiquid asset class. So now, not only can you buy into real estate at 1,000 bucks, but you can also buy, sell and trade that after a 90-day hold period or so. That’s a major differential.”

The company seeks to democratize investment opportunities with fewer steps and more access. You can learn more about the benefits of investing in AKRU at www. akru.co/benefits

This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investing advice.