What to Know When Reviewing Your Investment Portfolio in 2019

What to Know When Reviewing Your Investment Portfolio in 2019

“Some of the you should take will include an overall review of your investment plan to reducing your exposure stocks and shift more into bonds; or updating your will and end-of-life-documents.”

By Sturai Yusufi

We have all said hello to 2019.  As we enter this New Year it’s a great time to take steps to position our investments, finances, and estate plan to flourish in 2019. Some of those steps will include an overall review of your investment plan to reducing your exposure stocks and shift more into bonds; or updating your will and end-of-life-documents.

What to Takeaway from CRE?

The newly released 2019 edition of Deloitte’s Commercial Real Estate Outlook, shares one of its biggest takeaways, that more than 97 percent of the 500 global commercial real estate investors surveyed, would increase their capital allocation to real estate in the next 18 months.  This comes despite the concerns about interest rates and trade tariffs.

But the commercial real estate market in 2019 is very focused on the combination of rising interest rates and slowing of appreciation.  The Federal Reserve raised interest rates four times last year, with at least two hikes projected for 2019. Because of this combination, investors are looking for value-add opportunities, and rates will continue to have more impact on investment decisions.  This also a time when very thorough due diligence is critical to better safeguard investors.  With the majority of CRE decisions being based on analytics, investors are expecting a significant impact of technology in the next three years.  According to Deloitte’s 2019 outlook, more than 80 percent of their survey believe that CRE companies should prioritize the use of predictive analytics and business intelligence. Moreover, over the next 18 months, nearly 40 percent plan to increase the use of these two technologies to make their investment decisions. The plan is to have the ever-growing volume of CRE data be better used through technologies like machine learning, data analytics, and platforms.

Real Estate Investors and Opportunity Zones

Real estate investors are very interested in opportunity zones, a creation of the Tax Cuts and Jobs Act.  The tax incentives offered by these programs are immensely attractive.  The program allows individuals and businesses to liquidate a variety of appreciated capital assets and reinvest a portion or all of the capital gains into a qualified fund within 180 days of triggering the gain, and that gain can then be deferred up until December 31, 2026.  The recognized gain can further be reduced by 10 percent after holding the asset for five years, and by another 5 percent after holding it for seven years; with the biggest benefit after 10 years.

Retail Components

For the retail component of these assets, investors that are maintaining traditional retail will want to keep their focus on experiential retailers such as gym and fitness brands, hair and nail salons, quick-service and casual-dining restaurants. Services that are not accessible via e-commerce, allowing for better positioning to survive a shift in the market.

Lastly, if you are a homeowner or looking to be one in 2019 being aware that the residential real estate is seeing a generational shift.  With many millennials having recovered from 2009, and found jobs, allowing them to afford homes, with demand on them being more affordable in markets such as LA and San Francisco.  With this tradeoff, many of the baby boomers are downsizing their living spaces to smaller rentals or senior living facilities, another growing asset.

This article was featured on Globe St.

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