Investors Take Wait-And-See Attitude About Opportunity Zones

Real estate investors are taking a wait-and-see attitude about putting their money into opportunity zones, according to a new survey by EquityMultiple, a real estate investing firm and YouGov, a market researcher.

Over two-thirds (70%) of real estate investors and prospective investors said they’re not very or not at all likely to invest in an Opportunity Zone fund in the next 12-24 months.

However 56% of real estate investors said they could be interested in an Opportunity Zone Fund if the incentives were appealing enough.

In a breakdown of incentives that could increase their interest, 33% said they would be interested if the investments offer attractive net post-tax returns compared to other investments while 25% said a fund would be appealing if it helped them further diversify their portfolios to reduce risk, and 24% said they could look at an Opportunity Zone fund if they were able to defer taxes for long enough to make it worth their while.

Looking at ESG considerations, 26% said they would find a fund attractive if they could exactly know how the money would help those communities with the same share saying the funds would be more attractive if the government made changes to the program to ensure no influence from special interest.

The younger investors are, the more likely they are to invest in the zones. Close to half (47%) of younger millennials and Gen Z investors (18-34) said they are likely to invest in an Opportunity Zone fund in the next 12 to 24 months at 47% compared to only 15% for investors above 55.

“The data is clear that we must also focus on making sure the next generation has the opportunity to participate as investors so they can not only build wealth but take part in revitalizing their communities,” said the authors.

The results are based on an online poll from March 26 through 30 of 509 adults who have real estate investments or plan to invest in real estate.