VN VNQ Vanguard Real Estate ETF Loading... : Bullish and Bearish Analyst Opinions

Migration from anti-business, high-regulation states (e.g., New York, California) to pro-business, lower-cost states (e.g., Texas, Florida) is accelerating due to erosion of property rights, data center bans, and other policies. This creates a structural demand shift for real estate in the right jurisdictions, making him 'unbelievably bullish on real estate in the right places.'

US commercial real estate is an attractive entry point because it is undervalued versus equities (down 25%), has strong fundamentals with low vacancies across industrial, residential and retail, and faces a durable recovery with new construction at multi‑year lows.

Since the post-2008 era, overweighting US dollar, credit, equities, real estate, and infrastructure has been enormously profitable. The dollar remains the unchallenged world reserve currency with no signs of a shift in its dominant shares of trade, FX reserves, SWIFT payments, and cross-border loans. US equities appear expensive on PE ratios, but PEG ratios are not out of line due to strong earnings growth. The lack of a viable alternative to the dollar and the continuing inflow of immigrants and innovation support staying long the US across all major asset classes.

Inflation concerns are easing, so the relative appeal of REITs, which are often bought as inflation hedges, is declining. Reduce exposure to REITs in portfolios.

US REITs own essential real estate (apartments, hospitals, logistics) and have historically returned ~11% annually. During recessions they gained an average 10% while physical real estate fell, except in 2008 which was a black-swan credit event. REITs are currently flat because of high rates, but lower rates in the next crisis will lift property values and demand for REIT shares. They offer a compelling risk-return profile with high, mandatory dividends.

The bottom 25th percentile (affordable segment) of the Sydney and Melbourne housing markets is experiencing strong price growth (12-13%) due to generous first home buyer incentives like the 5% deposit scheme and a persistent lack of building supply. This segment is being buoyed despite broader market headwinds.

Necessity retail, particularly grocery-anchored retail, is resilient because these services (grocery, pharmacy, haircuts) cannot be done online all the time. Online grocery deliveries are often fulfilled from the actual store, supporting the physical location.

Prime residential real estate is a good long-term investment in a monetary inflation environment and should be part of a core portfolio.