Is Real Estate A Good Hedge Against Inflation?

Anyone who has been following recent headlines is definitely concerned about the future of their investments, and for good reason: inflation is at its highest point in a long time.

. The inflation rate in Canada recently jumped to 4.7 per cent, the highest in over eighteen years.

For many types of investment assets, inflation increases long-term costs and erodes purchasing power, reducing the rate of return that an investor can reasonably expect to see. Especially in a COVID-19 world, the future is uncertain, and inflation is a looming factor that could make anyone feel helpless about their finances.

Take a big breath; protecting against inflation is something that everybody can do, and it’s not difficult. Hedges are included in a well diversified investment portfolio to guard against market volatility brought on by high inflation. Residential property, which demonstrably appreciates faster than inflation, provides the perfect fit.

Why Real Estate Is The Solution

What makes real estate so successful as a hedge against high inflation rates? There are a lot of reasons for why real estate is so uniquely shielded against inflation, but these are some of the main factors:

  • Passive income is produced through investment real estate, which is obtained by collecting rent from renters. The rental income often increases along with inflation.
  • There is always a need for rental properties, and tenant turnover offers frequent chances to begin or extend tenant leases at the higher market-adjusted rates, which can further boost rental income.
  • During periods of rising inflation, this higher rental income raises the building’s overall property value.,

With these advantages in mind, real estate makes a great investment for intelligent investors even when inflation is high.


Consider The Details

Undoubtedly, real estate acts as a hedge against inflation, and owning property is always a good idea. Having said that, assuming complete insulation against inflation by only owning a home or piece of property without taking into account the finer elements would be oversimplification. Everything relies on the context, as with anything. Strategic real estate investment in the appropriate type of property is necessary for profitable returns.

Consider a modest property with just one or two apartments that cannot be restored or enhanced and is situated in a remote area far from any facilities. A property like this has a low rate of return on investment, may need a lot of maintenance, and, particularly if it is poorly managed, might soon develop into a problem rather than an asset.

When investing in real estate, a more focused and deliberate strategy aims to produce solid, dependable profits, regardless of market upswings, inflation, or market expansion. When looking for the correct kinds of properties with the greatest potential for value appreciation, there are a wide range of strategic and financial variables to take into account.

It is therefore perfect to invest in private equity real estate, which pools a variety of carefully vetted investment properties into one, curated fund, in order to secure a stake in high-value real estate that actually protects against inflation over time.


Pyramine Offers The Right Opportunities

Real estate investment funds are a great method to take advantage of all the long-term advantages of real estate ownership while also hedging against inflation. With Pyramine’s value-based strategy, we increase the value of every investment opportunity we pursue by enhancing, redeveloping, and examining growth prospects.


Acquisitions by Pyramine are carefully considered and evaluated in order to reduce any potential downside risk and maximise profit creation.