March 20, 2018
Those investing in apartments over the past decade understand that returns have been phenomenal, outperforming other property types. But are those apartment returns sustainable? In other words, would competition and new supply mean apartment returns decrease over time.
In truth, a recently released study from the National Multifamily Housing Council shows that apartment returns have exceeded those of other asset types, regardless of holding period, geographic region, metro size or growth rate. “Explaining the Puzzle of High Apartment Returns, written and researched by Mark Eppli (formerly with Marquette University, now with the University of Wisconsin-Madison) and Charles Tu (University of San Diego), showed that “commercial real estate returns mean-revert with longer-holding period analyses providing higher risk-adjusted returns.” Breaking this down, it means that, over time, apartment returns outperform returns from other real estate types.
The research study is the first to be funded by the NMHC’s Research Foundation.
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