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Visualizing the Real Estate Investment Universe

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Real Estate Investment

Real Estate Investment

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Visualizing the Real Estate Investment Universe

From residential property to data centers, real estate investment covers many different sectors.

While office, retail, and residential properties may come to mind first, the investment landscape extends to property types like health care and infrastructure—two sectors that were booming in 2021 as demand for laboratory space increased and facilities underpinning the digital economy expanded.

In this Markets in a Minute from New York Life Investments, we show the scope of U.S. publicly listed real estate investment trusts (REITs) by sector.

How Do REITs Work?

Most often, REITs are publicly-listed investments on a stock exchange. These investment vehicles manage income-producing properties and provide investors exposure to the real estate industry both through the price appreciation of property assets and the income earned through mortgages or leases.

By law, roughly 90% of this taxable income must be distributed to stockholders in dividends.

For instance, an office REIT may own a number of skyscrapers and office buildings that collect leases from tenants. This income from tenants—such as Salesforce or Amazon—would then be distributed to shareholders of the office REIT.

Today, U.S. publicly-listed REITs own 503,000 properties across the country valued at $2.0 trillion.

What are the Different Types of Real Estate Investment?

U.S. listed REITs fall into roughly 17 categories, according to data from Nareit.

Below, we will show each sector based on their earnings in the first quarter of 2022 as measured by funds from operations (FFO). FFO looks at cash flow earned from operations and is considered a broad performance indicator for the industry.

SectorEarnings*
Retail$3.5B
Infrastructure$2.7B
Residential$2.4B
Industrial$1.8B
Health Care$1.8B
Apartments$1.7B
Office$1.6B
Self Storage$1.3B
Shopping Centers$1.2B
Free Standing$1.2B
Regional Malls$1.1B
Data Centers$0.9B
Specialty**$0.8B
Diversified$0.6B
Lodging/Resorts$0.5B
Single Family Homes$0.4B
Manufactured Homes$0.3B
All Equity REITs$18.0B

*Measured by Funds From Operations (FFO).
**Specialty includes gaming, outdoor advertising, farmland, and other non-traditional REIT property types. Data as of Q1 2022.

Despite thousands of storefronts being shut down during COVID-19, retail earnings remained the largest across all sectors, at $3.5 billion. In fact, earnings bounced back to pre-pandemic levels during the first quarter of 2022.

As the second largest sector, infrastructure saw $2.7 billion in earnings, rising over 47% compared to the first quarter of 2021. Infrastructure includes wireless infrastructure, fiber cables, and energy pipelines.

Residential, at $2.4 billion, is the third largest sector. Like retail, earnings have exceeded pre-pandemic levels, rising over 19% since the end of 2019.

Overall, real estate investment earnings hit a record $18 billion, driven by sectors hit hardest by the pandemic.

Key Characteristics of Real Estate Investments

Thanks to long-term leases—often between 5 and 10 years—REITs provide stable dividend earnings to investors. In 2021, the average dividend yield of U.S. REITs was 2.6%, more than double the yield of the S&P 500 at 1.2%.

In addition, they are often well-positioned during inflationary environments. As the below table shows, during periods of high inflation REITs average annualized returns were 16%. Even better, REIT earnings increased as inflation levels continued to rise.

Inflation EnvironmentU.S. REIT Price ReturnU.S. REIT Income ReturnTotal Annualized Return
High Inflation (>6.3%)5.3%10.7%16.0%
Moderate Inflation (2.0%-6.3%)6.2%6.9%13.1%
Low Inflation(<2.0%)4.9%5.1%10.0%

Source: Morningstar (Jun 2021). REIT returns represented by the FTSE Nareit Equity REITs Index from Jan 30, 1976 to Jun 30, 2021.

While REITs are often positively correlated with inflation, they often have a low correlation with equities. For this reason, they can serve as a key diversifier when markets take a turn for the worse, potentially reducing the risk profile of your portfolio.

Due to the combination of these factors, real estate investments have proven resilient, with many REITS paying higher dividends than other forms of investments.

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Markets in a Minute

Mapped: GDP Growth Forecasts by Country, in 2023

The global economy faces an uncertain future in 2023. This year, GDP growth is projected to be 2.9%—down from 3.2% in 2022.

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GDP Growth

Mapped: GDP Growth Forecasts by Country, in 2023

Since Russia’s invasion of Ukraine early last year, talk of global recession has dominated the outlook for 2023.

High inflation, spurred by rising energy costs, has tested GDP growth. Tightening monetary policy in the U.S., with interest rates jumping from roughly 0% to over 4% in 2022, has historically preceded a downturn about one to two years later.

For European economies, energy prices are critical. The good news is that prices have fallen recently since March highs, but the continent remains on shaky ground.

The map shows GDP growth forecasts by country for the year ahead, based on projections from the International Monetary Fund (IMF) October 2022 Outlook and January 2023 update.

2023 GDP Growth Outlook

The world economy is projected to see just 2.9% GDP growth in 2023, down from 3.2% projected for 2022.

This is a 0.2% increase since the October 2022 Outlook thanks in part to China’s reopening, higher global demand, and slowing inflation projected across certain countries in the year ahead.

With this in mind, we show GDP growth forecasts for 191 jurisdictions given multiple economic headwinds—and a few emerging bright spots in 2023.

Country / Region2023 Real GDP % Change (Projected)2022 Real GDP % Change (Projected)
🇦🇱 Albania2.5%4.0%
🇩🇿 Algeria2.6%4.7%
🇦🇴 Angola3.4%2.9%
🇦🇬 Antigua and Barbuda5.6%6.0%
🇦🇷 Argentina*2.0%4.0%
🇦🇲 Armenia3.5%7.0%
🇦🇼 Aruba2.0%4.0%
🇦🇺 Australia*1.6%3.8%
🇦🇹 Austria1.0%4.7%
🇦🇿 Azerbaijan2.5%3.7%
🇧🇭 Bahrain3.0%3.4%
🇧🇩 Bangladesh6.0%7.2%
🇧🇧 Barbados5.0%10.5%
🇧🇾 Belarus0.2%-7.0%
🇧🇪 Belgium0.4%2.4%
🇧🇿 Belize2.0%3.5%
🇧🇯 Benin6.2%5.7%
🇧🇹 Bhutan4.3%4.0%
🇧🇴 Bolivia3.2%3.8%
🇧🇦 Bosnia and Herzegovina2.0%2.4%
🇧🇼 Botswana4.0%4.1%
🇧🇷 Brazil*1.2%2.8%
🇧🇳 Brunei Darussalam3.3%1.2%
🇧🇬 Bulgaria3.0%2.9%
🇧🇫 Burkina Faso4.8%3.6%
🇧🇮 Burundi4.1%3.3%
🇨🇻 Cabo Verde4.8%4.0%
🇨🇲 Cameroon4.6%3.8%
🇰🇭 Cambodia6.2%5.1%
🇨🇦 Canada*1.5%3.3%
🇨🇫 Central African Republic3.0%1.5%
🇹🇩 Chad3.4%3.3%
🇨🇱 Chile-1.0%2.0%
🇨🇳 China*5.3%3.2%
🇨🇴 Colombia2.2%7.6%
🇰🇲 Comoros3.4%3.0%
🇨🇷 Costa Rica2.9%3.8%
🇨🇮 Côte d'Ivoire6.5%5.5%
🇭🇷 Croatia3.5%5.9%
🇨🇾 Cyprus2.5%3.5%
🇨🇿 Czech Republic1.5%1.9%
🇨🇩 Democratic Republic of the Congo6.7%6.1%
🇩🇰 Denmark0.6%2.6%
🇩🇯 Djibouti5.0%3.6%
🇩🇲 Dominica4.9%6.0%
🇩🇴 Dominican Republic4.5%5.3%
🇪🇨 Ecuador2.7%2.9%
🇪🇬 Egypt*4.0%6.6%
🇸🇻 El Salvador1.7%2.6%
🇬🇶 Equatorial Guinea-3.1%5.8%
🇪🇷 Eritrea2.9%2.6%
🇪🇪 Estonia1.8%1.0%
🇸🇿 Eswatini1.8%2.4%
🇪🇹 Ethiopia5.3%3.8%
🇫🇯 Fiji6.9%12.5%
🇫🇮 Finland0.5%2.1%
🇫🇷 France*0.7%2.5%
🇲🇰 North Macedonia3.0%
🇬🇦 Gabon3.7%2.7%
🇬🇪 Georgia4.0%9.0%
🇩🇪 Germany*0.1%1.5%
🇬🇭 Ghana2.8%3.6%
🇬🇷 Greece1.8%5.2%
🇬🇩 Grenada3.6%3.6%
🇬🇹 Guatemala3.2%3.4%
🇬🇳 Guinea5.1%4.6%
🇬🇼 Guinea-Bissau4.5%3.8%
🇬🇾 Guyana25.2%57.8%
🇭🇹 Haiti0.5%-1.2%
🇭🇳 Honduras3.5%3.4%
🇭🇰 Hong Kong SAR3.9%-0.8%
🇭🇺 Hungary1.8%5.7%
🇮🇸 Iceland2.9%5.1%
🇮🇳 India*6.1%6.8%
🇮🇩 Indonesia*4.8%5.3%
🇮🇶 Iraq4.0%9.3%
🇮🇪 Ireland4.0%9.0%
🇮🇷 Iran*2.0%3.0%
🇮🇱 Israel3.0%6.1%
🇮🇹 Italy*0.6%3.2%
🇯🇲 Jamaica3.0%2.8%
🇯🇵 Japan*1.8%1.7%
🇯🇴 Jordan2.7%2.4%
🇰🇿 Kazakhstan*4.3%2.5%
🇰🇪 Kenya5.1%5.3%
🇰🇮 Kiribati2.4%1.0%
🇰🇷 South Korea*1.7%2.6%
🇽🇰 Kosovo3.5%2.7%
🇰🇼 Kuwait2.6%8.7%
🇰🇬 Kyrgyz Republic3.2%3.8%
🇱🇦 Lao P.D.R.3.1%2.2%
🇱🇻 Latvia1.6%2.5%
🇱🇸 Lesotho1.6%2.1%
🇱🇷 Liberia4.2%3.7%
🇱🇾 Libya17.9%-18.4%
🇱🇹 Lithuania1.1%1.8%
🇱🇺 Luxembourg1.1%1.6%
🇲🇴 Macao SAR56.7%-22.4%
🇲🇬 Madagascar5.2%4.2%
🇲🇼 Malawi2.5%0.9%
🇲🇾 Malaysia*4.4%5.4%
🇲🇻 Maldives6.1%8.7%
🇲🇱 Mali5.3%2.5%
🇲🇹 Malta3.3%6.2%
🇲🇭 Marshall Islands3.2%1.5%
🇲🇷 Mauritania4.8%4.0%
🇲🇺 Mauritius5.4%6.1%
🇲🇽 Mexico*1.7%2.1%
🇫🇲 Micronesia2.9%-0.6%
🇲🇩 Moldova2.3%0.0%
🇲🇳 Mongolia5.0%2.5%
🇲🇪 Montenegro2.5%7.2%
🇲🇦 Morocco3.1%08%
🇲🇿 Mozambique4.9%3.7%
🇲🇲 Myanmar3.3%2.0%
🇳🇦 Namibia3.2%3.0%
🇳🇷 Nauru2.0%0.9%
🇳🇵 Nepal5.0%4.2%
🇳🇱 Netherlands*0.6%4.5%
🇳🇿 New Zealand1.9%2.3%
🇳🇮 Nicaragua3.0%4.0%
🇳🇪 Niger7.3%6.7%
🇳🇬 Nigeria*3.2%3.2%
🇳🇴 Norway2.6%3.6%
🇴🇲 Oman4.1%4.4%
🇵🇰 Pakistan*2.0%6.0%
🇵🇼 Palau12.3%-2.8%
🇵🇦 Panama4.0%7.5%
🇵🇬 Papua New Guinea5.1%3.8%
🇵🇾 Paraguay4.3%0.2%
🇵🇪 Peru2.6%2.7%
🇵🇭 Philippines*5.0%6.5%
🇵🇱 Poland*0.3%3.8%
🇵🇹 Portugal0.7%6.2%
🇵🇷 Puerto Rico0.4%4.8%
🇶🇦 Qatar2.4%3.4%
🇨🇬 Republic of Congo4.6%4.3%
🇷🇴 Romania3.1%4.8%
🇷🇺 Russia*0.3%-3.4%
🇷🇼 Rwanda6.7%6.0%
🇼🇸 Samoa4.0%-5.0%
🇸🇲 San Marino0.8%3.1%
🇸🇹 São Tomé and Príncipe2.6%1.4%
🇸🇦 Saudi Arabia*2.6%7.6%
🇸🇳 Senegal8.1%4.7%
🇷🇸 Serbia2.7%3.5%
🇸🇨 Seychelles5.2%10.9%
🇸🇱 Sierra Leone3.3%2.4%
🇸🇬 Singapore2.3%3.0%
🇸🇰 Slovak Republic1.5%1.8%
🇸🇮 Slovenia1.7%5.7%
🇸🇧 Solomon Islands2.6%-4.5%
🇸🇴 Somalia3.1%1.9%
🇿🇦 South Africa*1.2%2.1%
🇸🇸 South Sudan5.6%6.5%
🇪🇸 Spain*1.1%4.3%
🇱🇰 Sri Lanka-3.0%-8.7%
🇰🇳 St. Kitts and Nevis4.8%9.8%
🇱🇨 St. Lucia5.8%9.1%
🇻🇨 St. Vincent and the Grenadines6.0%5.0%
🇸🇩 Sudan2.6%-0.3%
🇸🇷 Suriname2.3%1.3%
🇸🇪 Sweden-0.1%2.6%
🇨🇭 Switzerland0.8%2.2%
🇹🇼 Taiwan2.8%3.3%
🇹🇯 Tajikistan4.0%5.5%
🇹🇿 Tanzania5.2%4.5%
🇹🇭 Thailand*3.7%2.8%
🇧🇸 The Bahamas4.1%8.0%
🇬🇲 The Gambia6.0%5.0%
🇹🇱 Timor-Leste4.2%3.3%
🇹🇬 Togo6.2%5.4%
🇹🇴 Tonga2.9%-2.0%
🇹🇹 Trinidad and Tobago3.5%4.0%
🇹🇳 Tunisia1.6%2.2%
🇹🇷 Turkey*3.0%5.0%
🇹🇲 Turkmenistan2.3%1.2%
🇹🇻 Tuvalu3.5%3.0%
🇺🇬 Uganda5.9%4.4%
🇺🇦 UkraineN/A-35.0%
🇦🇪 United Arab Emirates4.2%5.1%
🇬🇧 United Kingdom*-0.6%3.6%
🇺🇲 U.S.*1.4%1.6%
🇺🇾 Uruguay3.6%5.3%
🇺🇿 Uzbekistan4.7%5.2%
🇻🇺 Vanuatu3.1%1.7%
🇻🇪 Venezuela6.5%6.0%
🇻🇳 Vietnam6.2%7.0%
West Bank and Gaza3.5%4.0%
🇾🇪 Yemen3.3%2.0%
🇿🇲 Zambia4.0%2.9%
🇿🇼 Zimbabwe2.8%3.0%

*Reflect updated figures from the January 2023 IMF Update.

The U.S. is forecast to see 1.4% GDP growth in 2023, up from 1.0% seen in the last October projection.

Still, signs of economic weakness can be seen in the growing wave of tech layoffs, foreshadowed as a white-collar or ‘Patagonia-vest’ recession. Last year, 88,000 tech jobs were cut and this trend has continued into 2023. Major financial firms have also followed suit. Still, unemployment remains fairly steadfast, at 3.5% as of December 2022. Going forward, concerns remain around inflation and the path of interest rate hikes, though both show signs of slowing.

Across Europe, the average projected GDP growth rate is 0.7% for 2023, a sharp decline from the 2.1% forecast for last year.

Both Germany and Italy are forecast to see slight growth, at 0.1% and 0.6%, respectively. Growth forecasts were revised upwards since the IMF’s October release. However, an ongoing energy crisis exposes the manufacturing sector to vulnerabilities, with potential spillover effects to consumers and businesses, and overall Euro Area growth.

China remains an open question. In 2023, growth is predicted to rise 5.2%, higher than many large economies. While its real estate sector has shown signs of weakness, the recent opening on January 8th, following 1,016 days of zero-Covid policy, could boost demand and economic activity.

A Long Way to Go

The IMF has stated that 2023 will feel like a recession for much of the global economy. But whether it is headed for a recovery or a sharper decline remains unknown.

Today, two factors propping up the global economy are lower-than-expected energy prices and resilient private sector balance sheets. European natural gas prices have sunk to levels seen before the war in Ukraine. During the height of energy shocks, firms showed a notable ability to withstand astronomical energy prices squeezing their finances. They are also sitting on significant cash reserves.

On the other hand, inflation is far from over. To counter this effect, many central banks will have to use measures to rein in prices. This may in turn have a dampening effect on economic growth and financial markets, with unknown consequences.

As economic data continues to be released over the year, there may be a divergence between consumer sentiment and whether things are actually changing in the economy. Where the economy is heading in 2023 will be anyone’s guess.

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Markets in a Minute

Chart: The State of U.S. Retirement Assets in 2022

U.S. retirement assets have faced challenging conditions amid market headwinds—but over the last decade these assets have nearly doubled.

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U.S. Retirement Assets in 2022

This infographic is available as a poster.

Chart: The State of U.S. Retirement Assets in 2022

Today, many people are questioning the effects of high inflation on their retirement assets.

This Markets in a Minute from New York Life Investments charts the state of U.S. retirement assets to show how Americans are building their retirement savings, and where these assets are being drawn from.

U.S. Retirement Assets: Where it Stands Today

As of 2022, there was over $33 trillion being held in U.S. retirement assets.

For perspective, that’s about 31% of all household financial assets in America and nearly double the amount seen a decade ago. In the table below, we show how this breaks down by retirement asset type, using data from the Investment Company Institute:

Type of Retirement Asset2022*2012200219921982
IRAs$11.7T$5.8T$2.5T$872B$67B
DC Plans$9.3T$5.2T$2.6T$1.1T$264B
State and Local Government DB Plans$5.1T$3.2T$2.1T$958B$260B
Private-Sector DB Plans$3.2T$2.7T$1.7T$1.1T$479B
Federal DB Plans$2.2T$1.3T$800B$411B$99B
Annuities$2.2T$1.7T$899B$473B$180B
Total $33.7T$19.9T$10.5T$5.0T$1.3T

*As of Q2 2022.

As seen above, individual retirement accounts (IRAs) hold the most retirement assets, at 34% of the total. Since 2012, they have doubled, jumping from $5.8 trillion to $11.7 trillion in 2022.

Today, about 37% of Americans hold an IRA.

With $9.3 trillion in assets, defined contribution (DC) plans are the second-greatest source of savings. These type of plans have the employee make contributions that are automatically deducted from their paycheck. Here, employers have the option to make contributions. Like IRAs, they have grown considerably in the last 10 years.

Defined benefit (DB) plans, meanwhile, have declined in usage, especially in the private sector. In 1982, private-sector DB plans made up almost 40% of U.S. retirement assets. In 2022, they accounted for under 10% of these assets.

Overall, retirement assets have declined in 2022 due to weak market performance—after a record year in 2021 driven by higher contributions, a strong market, and other factors.

U.S. Financial Security in 2022

With these factors at play, how are Americans feeling about their financial security, and how is this impacting their retirement outlook?

In one Ipsos survey, just 56% of Americans surveyed said they felt good about their overall level of financial security.

When it comes to their long-term outlook, chief among concerns is inflation. Over half surveyed said that it will likely have a big impact on their ability to save for retirement and meet other long-term financial goals. Rising interest rates and medical costs are other areas of concern, with about one-third saying they will have a large impact on achieving these outcomes.

Meanwhile, 59% of Americans said they feel confident they have enough savings to enjoy a comfortable retirement. Of these, Baby Boomers feel most confident at 70%, while Gen Z (48%) feels least confident.

The good news is that inflation looks to have hit its peak in the summer of 2022. Still, reaching a 2-3% target may take a longer period of time. With this in mind, looking to investment strategies that include floating-rate bonds and real estate, infrastructure, and value equities may help insulate retirement assets from market fluctations and inflation.

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