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.

Earning decent returns isn’t easy when you have to compete with Blackstone's big guns. Low single-digit yields are tough to swallow in an environment where interest rates are rising and inflation is at 8.5%.

Real estate 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.

Omega Healthcare Investors (OHI) focuses on nursing homes and assisted-living facilities across the US and UK. The company focuses on triple-net leases with 64 operators across these two countries.