Investment Risks in Gentrifying Urban Properties

As a senior analyst at a private equity real estate firm, you are tasked with assessing the risk considerations of various properties in the firm’s portfolio. One of your colleagues presents a case about a multi-family residential property located in an urban area undergoing significant gentrification. They argue that the potential appreciation due to improved neighborhood conditions makes this property an attractive investment. However, you are concerned about the inherent risks associated with gentrification that may negatively impact the property.

Which of the following risk considerations should be prioritized when evaluating the investment in this property?