Rising interest rates impact real estate

Article Excerpt

Apart from the overall market decline, higher interest rates in Canada and the U.S. are the main reason for weakness in the shares of real-estate firms and REITs. So far this year, ETFs holding U.S. and Canadian REIT have lost around 20% of their value. However, the outlook for almost all segments of the real estate market are now quite positive. That’s especially so for industrial, multi-family properties and grocery-anchored retail. As well, while the outlook for segments like offices and other retail is less robust, REITs focused in those areas are also reporting steady results for the 2022 second quarter. They also generally expect a favourable operating environment for the rest of the year. Central bankers are now reacting to inflation With the start of the COVID-19 pandemic in early 2020, central banks around the world dropped interest rates sharply, and also started buying massive quantities of bonds on the open market to inject even more liquidity into the system. The effects of this…