Blackstone is preparing a record $50 billion vehicle to scoop up real estate bar...

Residential real estate is arguably the most valuable and accessible segment of real estate asset class. Its popularity has driven a disproportionate amount of capital into residential real estate — particularly from institutional funds — pushing up valuations and pushing yields lower.

Real estate investment giants continue to buy up homes — something that is likely here to stay, even with higher mortgage rates. In fact, Blackstone is close to finalizing what could be the biggest traditional private-equity real estate investment fund in history, according to the Wall Street Journal.

In a regulatory filing last month, Blackstone said that it has secured $24.1 billion of commitments for its latest real estate fund called Blackstone Real Estate Partners X. Combined with Blackstone’s real estate funds in Asia and Europe, the company will have over $50 billion available for opportunistic investments.

In the event of a market downturn, Blackstone will have plenty of capital to scoop up some attractive real estate bargains.

But earning a good yield isn’t easy in today’s economic climate. The gross rental yield for a typical New York apartment is just 2.9%. The dividend yield on residential REITs is also mediocre.

Low single-digit yields are tough to swallow in an environment where interest rates are rising and inflation is at 9.1%.

Investors need to look beyond residential properties. Here are some niche REITs that offer better returns.

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Healthcare properties

Healthcare is the most defensive sector. Recessions and credit cycles don’t have much impact on emergency healthcare services, which makes hospitals and clinics ideal real estate targets.