The photo above was taken in Porto, Portugal. The city lies on the banks of the Douro River estuary and the Atlantic Ocean. Porto is really a charming old world town with an attractive real estate market. It's also related to the Global Warming map below.
Portugal was the only European destination I visited this year. For the past 20 years I spent every summer on a different Greek island with the family. Unfortunately, because of pandemic we didn't visit Greece during 2020/21. So I made amends in Manhattan. Well, it's an island, right? And it's full of Greeks, right? And I'm surrounded by Manhattan’s best Greek restaurants, right? (You bet!), and I drink Greek coffee regularly anyway (I do, too much). So, I spent this summer in my own NYC Greek island resort and enjoyed the atmosphere and Greek food that Manhattan has to offer. Hopefully I'll see a real Greek island again in 2022.
Throughout the summer we worked on upgrading the properties we purchased in NY and Myrtle Beach in the winter of 2020. It made me miss those "good old" COVID days. Prices were lower and there was less competition. Now NY residential market is sizzling again and Myrtle Beach is a different place. There are still opportunities in the office and retail segments in NYC. Some neighborhoods are still depressed and Omicron might slow the recovery so you may still get good deals. From my observation, if there was one neighborhood that got hit the least and recovered the fastest, it was Greenwich Village. Specifically West Village. The Village is definitely NYC's strongest resi-market and if you read my previous posts, you would have noticed that I sensed this even during the peak of the pandemic since it was always crowded and alive even during the worst winter months.
The Village is cool because of students. You want to invest where students live. They'll pay any price to be close to their hangout joints. Actually, their parents usually pay, but it’s obvious that students are a rent magnet that pulls rents up. That's why I recently spent some time in Charleston, SC and intend to spend more time in student centers. I have previously written about the relationship between education and real estate (The Gordian Knot) where I compared major student cities. The bottom line was that housing demand was strong in urban student centers.
In 40 Broad, we identified Myrtle Beach, SC as a fast-growing city with a short housing supply. It's evident when you visit the city but don't just take my word for it. You can read for yourself here and maybe find your next investment destination. We've signed contracts to purchase about 200 units across the city. Many of them for short-term rentals that generate a higher income. This portfolio is an addition to a smaller portfolio that we bought there in the winter.
In GREI, we've made a step into Student Housing. We signed a contract to purchase a large student housing compound. It's a beautiful, upscale student complex that caters to a large university, not too close to Atlanta, with its own local economy and real estate market. We plan to upgrade all units.
Myrtle Beach
A 34-unit complex of 2 story buildings.
Myrtle Beach
Eight unit SFH complex, a short walking distance from the beach.
Myrtle Beach
Six townhomes, a short walking distance from the beach.
Atlanta, GA
A 15-building complex with a swimming pool and student center.
This is the South Ferry subway station in lower Manhattan on October 29th, 2012, during Hurricane Sandy. The storm surge, coupled with an already high tide led to major flooding. Based on recordings by the National Ocean Service, parts of Battery Park could have been inundated with up to 9 feet of water. It began at night, and I remember how the water rose, flooding the area and locking us in. We wondered if it would ever stop... 43 died, 17,000 homes were damaged, 2 million people were without power and the estimated damage to NYC was around $19 billion.
That was a Global Warming taste of things to come. The Glasgow Climate Change Conference made us recall a very important topic that was neglected because of COVID. Since some argue that it's a political agenda, let's just agree that the world is warming up, whether it's man made or not. Studies show that sea levels are rising at the fastest rate in 2,800 years and this has already had an impact on real estate. Our civilization has always been dependent on coastal regions and rivers since it was convenient for transportation, commerce, and food. Therefore, major cities evolved next to ports and waterways and now they are vulnerable. City authorities need to step up and protect lower altitude areas at a high cost. NYC for example, approved the Sea Wall project with an initial budget of $20 billion that's expected to increase to $120 billion. Cities with less resources will have to just give up and let nature claim back the land.
So why do we still buy properties in beach cities and why even consider coastal locations? Firstly, because people still want to live next to beaches. Secondly, studies show that people have a short memory. Coastal real estate prices show a sharp decrease immediately after floods but the effect is diminished usually within 5 years. And lastly, we consider coastal locations that would be relatively safe from a moderate rise in sea level. It's easy to check. Your insurance company has all the information and projections. To check your location and the effect of rising sea level on where you live or invest, please use this link which gives a fantastic demonstration of the effects in the US. For a global view, try this link.
This publication is personal and not for general circulation. It does not form part of any offer or recommendation. It does not take into consideration investment objectives, financial situation or needs of any specific person. Prior to committing to an investment, please seek advice from a licensed professional regarding the suitability of the product for you and read the relevant product offer documents, including the risk disclosures, If you do not wish to seek financial advice, please consider carefully whether the product is suitable for you.
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