The benefits of alternatives in these volatile times

Romundt felt stocks are overpriced and investors should be in real estate right now, but they should be picky about what since 35 to40% of staff would quit rather than return to the office. He thinks apartments are the place to be for the next five to ten years because “we’ve got so many great tailwinds”, such as short duration leases, the price to rent ratio, and immigration, but the future will be in newer, rather than older, properties.

Chris Nickerson, Managing Director of the Toronto-based Equiton, a rapidly growing private equity real estate investment organization that has a multi-residential and multi-family building portfolio, agreed, saying he thought inflation was probably a generational, rather than a ten-year, fix.

In the meantime, he felt that the rising interest rates mean more people will be renting than buying. While they may kick home ownership further down the road, he noted that a recent National Bank study said that that could now take 363 rather than 250 months.

“Home affordability, going into these rate increases, was already a challenge. With the additional rate increases, it’s going to be even more of a challenge. So, I think we could see an explosion of the rental market going forward,” he said, echoing Romundt that apartments are the best choice

Matt Zabloski, portfolio manager and founder of the Vancouver-based Delbrook Capital Advisors, which runs multiple strategies, including industrials, materials, and energy, in the cyclical equity universe, noted that a recent Scotiabank commentary said the Bank of Canada can’t do all the heavy lifting in addressing the current situation, but needs a fiscal response that ends handouts.

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