Equity capital will continue to flow strongly into real estate in 2007, but it will be recycled into investments such as small equity funds, limited partnerships, and niche properties, according to the chairman of the University of Southern California's Lusk Center for Real Estate.
Stan Ross said some investors will shift their investments from public real estate investment trusts to smaller private equity funds, limited partnerships, joint ventures, and direct investments in niche properties. "Shareholders who received attractive payouts when the REITs were acquired are reinvesting some of that capital directly into real estate," he said.
Mr. Ross predicted that capital will continue to flow into traditional office, retail, industrial, and hotel assets, but that alternative investments such as urban infill, adaptive reuse of old buildings, and multifamily/retail development near inner-city transit centers will attract greater interest.