Today’s market conditions, while in transition, are ripe with opportunities for investors of all levels. With record-low interest rates and relatively cheap properties, investors are able to capitalize in just about any market. According to Jonathan Gray, Blackstone’s global head of real estate, a distinct lack of inventory and newly acquired fundamentals have combined to create the perfect environment for savvy investors. In addition, Blackstone investments continue to serve as a reliable market indicator.
When asked if Blackstone investments, the largest owner of single-family homes in the U.S., is done purchasing respective properties, Gray replied, “Not yet.”
“In places like California it has gotten more difficult, but as you move East … Atlanta, Chicago, Northern Florida—we still see good value,” he told “Squawk on the Street” on Tuesday.
Blackstone Real Estate has approximately $60 billion in assets under their management. An extra $10 billion in capital has been reserved for additional Blackstone investments that they are looking to make in the near future. More than $5 billion, just a portion of their assets, is invested in 31,00 homes between 13 U.S. markets.
While a lot of their assets are focused on the recent rise of home prices, they remain below 2006 levels throughout several markets, Gray said. “We think they still represent good value, and the supply-demand picture there looks pretty good. We’ve only been building at about half the rate of obsolescence and population growth in terms of new starts, and that is supporting the value.”
Gray acknowledged that while the firm is in the later stages of the investment cycle, they would remain persistent in acquiring single-family homes for another two to four years. In doing so, they intend to zero in on markets exhibiting exceptional growth. In certain markets, Blackstone intends to invest in commercial real estate; a lack or product and stronger economy could produce higher yields.
“New supply has gone from 200 million square feet back in 2006 to less than 10 million square feet in 2012,” Gray told CNBC. “And that’s why shopping centers are doing well.”
“Out there on the ground, yes, rates are moving up—but that’s because of better economic performance,” he said. “But in our sector in particular, the lack of new supply is making it stronger than the economy at large.”