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Unconventional Wisdom: Identifying Investment Gold in Abandoned Malls

By Last Updated: November 29, 2023
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In a world where traditional investment opportunities are thoroughly picked over, savvy investors are turning their attention to the most unlikely places. The latest buzz? Abandoned malls. Yes, you read that correctly. While e-commerce and changing consumer habits have seemingly hammered the last nail in the coffin for these once-bustling centers of commerce, a deeper dive reveals they may be the dark horses of the investment world as we head into 2024.

What if the best investments are those that are the hardest to stomach, those that appear unequivocally defeated? This counterintuitive approach is not about chasing the latest high-flying asset but about recognizing potential in the unlikeliest of places. It’s about considering what everyone else has written off as a bygone era – such as your local mall.

Recent transactions show that malls, which at their peak commanded hundreds of millions, are now being snapped up for a fraction of their valued price. These aren’t just distressed sales; they are strategic acquisitions by investors like Namar Reality Group, who see beyond the dilapidated façades. With a portfolio of 80 malls and a gross profit of $86 million, they challenge the narrative that malls are a sunset industry.

These investors are not merely acquiring the malls – they’re acquiring potential. By subdividing and selling off parcels of land, especially those with freestanding buildings like fast-food restaurants, they’re turning what many would consider liabilities into lucrative assets. It’s a lesson in recognizing value where others see none.

The conventional mall structure is being reimagined. Spaces once occupied by retail giants are now being leased to unconventional tenants at rates that, while lower, provide a solid return on investment due to the significantly reduced purchase price. From boxing gyms to community spaces, these new-age malls are breathing life into what many deemed as dead.

The hardest part of this investment strategy? Overcoming the psychological barrier. When everyone around you says it’s madness, when the asset in question seems to have no future, that’s precisely where the opportunity lies. It’s about adjusting one’s perspective, recalibrating the investment lens, and seeing the hidden value.

This narrative isn’t advocating a blind rush into purchasing derelict malls. Instead, it’s about understanding that some of the most significant opportunities come dressed in the guise of the most significant aversions. It’s a call to rethink what constitutes a ‘good’ investment and to recognize that often, going from horrible to merely bad is where the real profit is made.

As we sail into the uncertain waters of 2024, with recessionary winds blowing stronger, the lesson here is clear. The best investments are rarely the most popular or the most comfortable. They are found in the remnants of yesterday’s prosperity, waiting for the discerning eye to see their tomorrow’s potential. So, as you contemplate where to place your next investment bet, ask yourself: what is the market missing? The answer might just surprise you.

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