--- title: 6 Implications of Rising Interest Rates on Real Estate Investments description: Property performance trends have been historically resilient during times of rising interest rates. image: https://blog.factright.com/hubfs/Blog%20Images/AdobeStock_80634330.jpeg --- behance bloglovin dribbble email facebook flickr github gplus instagram linkedin medium periscope phone pinterest rss snapchat stumbleupon tumblr twitter vimeo xing youtube - [Facebook](https://www.facebook.com/FactRightLLC/) - [Twitter](https://twitter.com/factright) - [Linkedin](http://www.linkedin.com/company/395017?trk=tyah) - [Phone](tel:866-357-7779) [Report Center Login >](http://www.factrightreports.com/Account/Login) - [Home](http://www.factright.com/) - [ABOUT US](http://www.factright.com/team/) - Financial Advisory Firms - [FR Risk Management](http://www.factright.com/fr-risk-management/) - [Report Center](https://www.factright.com/resources/report-center/) - [Product Coverage](https://www.factright.com/resources/list-of-coverage/) - Product Sponsors - [Due Diligence Reporting](http://www.factright.com/due-diligence-reporting/) - [Preparing for FactRight Diligence](https://www.factright.com/preparing-for-factright-diligence/) - [Resources](https://www.factright.com/resources/) - [Report Center](https://www.factright.com/resources/report-center/) - [FactRight Webinars](https://www.factright.com/resources/webinars/) - [FAQs](https://www.factright.com/resources/faqs/) - [Events](https://www.factright.com/events/) - [Weekly Updates](https://www.factright.com/weekly-updates/) - [FactRight Blog](https://blog.factright.com/) - [Contact](http://www.factright.com/contact/) # 6 Implications of Rising Interest Rates on Real Estate Investments July 25, 2017 by [FactRight](https://blog.factright.com/author/factright) ![Rising interest rates on real estate investment](https://blog.factright.com/hs-fs/hubfs/Blog%20Images/AdobeStock_80634330.jpeg?width=320&name=AdobeStock_80634330.jpeg "Rising interest rates on real estate investment")Rising interest rates do not automatically result in lower real estate values or dividends. Rather, how rates affect real estate returns is complex and depends upon a myriad of factors. [Property performance trends have been historically resilient](https://www.tiaa.org/public/pdf/real_estate_the_impact_of_rising_interest_rates.pdf) during times of rising interest rates.  Although you may expect higher interest rates to translate into higher capitalization rates and lower property values, the correlation is rough at best. Rising interest rates usually indicate that the economy is getting stronger, increasing the demand for real estate. The “relationship” is much more complex. Because real estate values have surged since 2009, it appears we could be reaching the peak for valuation increases. Yet, experts predict that economic growth will continue to be strong. Real estate remains an attractive way to diversify a portfolio because it can often provide predictable cash flows, higher risk-adjusted returns when compared to other asset classes, and a hedge against inflation. Short-lease property sectors, such as hospitality and multifamily, perform even better than long-term lease properties when the economy does better. For example, hotels, apartment, and self-storage properties can more rapidly increase rental rates to reflect stronger economic conditions. Therefore, they can reflect revenue growth more quickly during an inflationary period than other asset classes. 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