While real estate investing has faced significant challenges in recent years, it’s crucial to recognize that not all markets are the same. Real estate assets often go through cycles—sometimes for years—where they experience periods of both underperformance and outperformance. Yet, media coverage often oversimplifies the real estate sector, portraying it as a uniform investment type that behaves similarly across all locations and asset categories.

In reality, real estate investing is a complex, multifaceted landscape that demands careful analysis and a deeper understanding of local markets. Investors who are willing to put in the time and effort to research the nuances of various real estate types will find that different asset classes across different jurisdictions can, and often do, perform very differently in response to shifting market conditions.

The well-known adage “real estate is local” holds true for a reason. Real estate markets are heavily influenced by local factors, including population trends, cultural preferences, and even politics at the national, regional, and municipal levels. A multifamily rental project might make sense in a smaller city like Lethbridge, Alberta, while a 50-story condo development is more suitable for larger urban centers like Vancouver or Montreal. Similarly, while a data center or industrial hub might work well in Toronto or Halifax, smaller towns may thrive with a grocery-anchored retail plaza.

Geography and asset type play a major role in real estate investing. Typically, real estate falls into four main categories: residential, commercial, industrial, and office. While residential properties are often a safe bet with consistent demand, other real estate sectors can fluctuate significantly. For example, the office sector has been particularly hard-hit in the post-pandemic world as businesses shift toward remote work, reducing the need for office space and leading to higher vacancies and declining rents.

Similarly, commercial real estate has struggled with the ongoing shift toward e-commerce, which has permanently altered consumer behavior. The demand for physical retail spaces has diminished as more consumers opt for home delivery and online services.

Real estate development has also taken a major hit due to rising costs. Higher input prices, along with expensive construction financing, have made it challenging for developers to achieve the expected returns on their projects. This has been compounded by higher inventories in the resale market, which further complicates development plans.

On the flip side, multifamily rental real estate has seen strong growth, particularly in Canada. With rents and profits steadily increasing due to a severe imbalance between supply and demand, this sector remains a bright spot for investors. In a market where rental housing is in high demand but short supply, rents have surged, and this trend is expected to continue as the government struggles to close the gap.

However, this dynamic isn’t universal. In the U.S., for instance, multifamily rentals have faced different challenges. Construction-friendly regulations and lower immigration rates have led to an oversupply of rental properties, resulting in lower rents and reduced profits.

Investing in real estate—like any asset class—requires time, effort, and careful analysis. Professional investors know better than to rely on broad market trends or generalized media reports. Instead, they dig into the specifics, identifying opportunities in areas that are thriving while avoiding markets that are struggling.

The takeaway for investors? Stay informed but be discerning. Separate the underperforming sectors from those that are excelling, and always focus on detailed, localized analysis. By doing so, you can find attractive opportunities in real estate even in challenging markets, achieving better risk-adjusted returns by focusing on the specifics rather than the generalities.