Generation Rent – the symbiosis of apartment REITs and Millennials

Sourced: AMP Capital, April 2017

As part of our ongoing insights into real assets investing, we'd like to share with you a new white paper from our Global Listed Real Estate team - 'Generation Rent'.

The rise of the Millennial generation and its implications for the residential market in the US is a current and informative case study of the impact of demographics on the real estate asset class. A set of structural forces has combined to bestow Generation Y with the unofficial title of 'Generation Rent' in direct reference to the high impact change being wrought upon home ownership in the US by this demographic cohort.

Cyclical affordability issues and demographic change has resulted in a larger share of the population living and renting in the city centre. Over the property cycle, the US apartment REITs should, therefore, be in a stronger position to push rents, given the larger demand base, and quality management teams with insight into the needs of Millennials will be best placed to deliver value for investors.

This is certainly not to say that the US apartment REITs will always outperform. Indeed, there will be times when better opportunities present themselves, particularly if investing in the listed real estate sector with a global remit. However, we believe that this subsector is a more attractive through-cycle investment because of the structural tailwinds described in this white paper.

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