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Real Estate

Single-family rentals: Strong future demand drivers to propel sector outperformance

Overhead view of a suburban neighborhood

Sizable market opportunity

During the next decade, we believe institutional real estate portfolios will transform as investors gain more familiarity with single-family rentals and start increasing their allocations to them. Google Search Trends data (below) indicates that the search for “Single House for Rent” has significantly increased over the last decade, signaling the overall interest and curiosity in this property type from both potential renters and investors. We anticipate single-family rentals will play a more significant role in institutional real estate portfolios in the coming decades as investors have recognized their resiliency throughout the COVID-19 pandemic. Before single-family rentals become a part-and-parcel component of institutional real estate portfolios, investors should consider adding them to their portfolios as a way to drive outperformance and generate enhanced returns.

Chart: Google search for single house for rent

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Endnotes

 The views and opinions expressed are for informational and educational purposes only as of the date of production/writing and may change without notice at any time based on numerous factors, such as market or other conditions, legal and regulatory developments, additional risks and uncertainties and may not come to pass. This material may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections, forecasts, estimates of market returns, and proposed or expected portfolio composition. Any changes to assumptions that may have been made in preparing this material could have a material impact on the information presented herein by way of example. Past performance is no guarantee of future results. Investing involves risk; principal loss is possible.

All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such. For term definitions and index descriptions, please access the glossary on nuveen.com. Please note, it is not possible to invest directly in an index.

A word on risk

Equity investments are subject to market risk, active management risk, and growth stock risk; dividends are not guaranteed. Foreign investments involve additional risks, including currency fluctuation, political and economic instability, lack of liquidity and differing legal and accounting standards. These risks are magnified in emerging markets. The use of derivatives involves additional risk and transaction costs.

Debt or fixed income securities are subject to market risk, credit risk, interest rate risk, call risk, tax risk, political and economic risk, derivatives risk, income risk, and other investment company risk. As interest rates rise, bond prices fall. Credit risk refers to an issuer’s ability to make interest payments when due. Below investment grade or high yield debt securities are subject to liquidity risk and heightened credit risk. Foreign investments involve additional risks as noted above.

Socially responsible investments are subject to social criteria risk, namely the risk that because social criteria exclude securities of certain issuers for non-financial reasons, investors may forgo some market opportunities available to those that don’t use these criteria. Investors should be aware that alternative investments including private equity and private debt are speculative, subject to substantial risks including the risks associated with limited liquidity, the use of leverage, short sales and concentrated investments and may involve complex tax structures and investment strategies.

Nuveen provides investment advisory services through its investment specialists.

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