Like business and economic cycles, stock markets also have cycles where they will take a liking to a particular sector in such a manner that valuations will go through the roof. Then comes a phase, where the same sector is thrown down the dumps. Real estate sector is one sector where in 2008, valuations were at their peak. then come and fall and by the start of 2020 valuations were in the dumps. After the recovery of the last four years real estate stocks have reached the level where they are not as cheap as they were in 2020 nor they have reached levels where one can say a bubble has formed. So, while taking exposure to the real estate sector it would be better to stay with select stocks, where management has learnt how to deal with both good and bad times. Also they operate in a region where the average income is higher. Exposure to both office and residential real estate is extremely important to ensure debt which is bound to be there is served with trouble.
