There’s little doubt that the market for most real estate investors remains volatile. A recent article published by JLL indicated “sticky” inflation and continued softening in the housing market. Meanwhile, the Federal Reserve that is committed to continued Effective Federal Fund rate hikes, at least until the Personal Consumption Expenditures Price Index (PCE) starts to decline.
The JLL article noted that higher interest rates are partially causing an economic slowdown, and “therefore represent a headwind in the CRE market.” The result? A net negative for the CRE market, and increasing caution, according to the article.
But there are different types of investors out there, with “private investors and real estate investment trusts entering the commercial real estate market with different viewpoints,” Matthews Real Estate Investment Services recently noted. Matthews went ahead to forecast the following outlook for both REITs and private investors:
REITS, overall, tend to have more liquidity, with some trading publicly on major stock exchanges. They have a low investment threshold and view investments as more diversified and cost-efficient, as well as less risky, compared to private investments.
At this point, REITS are trading at substantial discounts, which could mean tailwinds in the coming year. Additionally, “what hurts REITS the most is the anticipation of interest rate spikes,” noted Matthews. This means if EFFR stabilizes in the next few months, “performance could improve.”
Additionally, experts anticipate that REITs might invest more in the current market because they’re better placed to handle headwinds due to significant capital, security and liquidity. The product of choice is varied, though multifamily and industrial properties are targeted, along with assets in non-gateway markets.
Private Investment
Unlike REIT investors, private investors do have more control over assets, along with potential tax benefits and a weaker correlation to the market and other financial assets. But they also face more risk, due to a higher capital concentration and less liquidity.
What this means in 2023 is that “the current market is more challenging for private investors to secure financing due to the cost and availability of capital,” Matthews commented. Private equity is facing a tough haul, with tight credit markets, weak economic activity and challenging political environments.
In this climate, private investors are looking for demand-focused assets, like industrial and multifamily.
The post What Do Investors REALLY Want? appeared first on Connect CRE.
There’s little doubt that the market for most real estate investors remains volatile. A recent article published by JLL indicated “sticky” inflation and continued softening in the housing market. Meanwhile, the Federal Reserve that is committed to continued Effective Federal Fund rate hikes, at least until the Personal Consumption Expenditures Price Index (PCE) starts to …
The post What Do Investors REALLY Want? appeared first on Connect CRE.
Robert Khodadadian has long had a simple philosophy about selling real estate. There are approximately a million buildings in the city, and the broker that gets to sell any one among the multitude that will hit the auctioning block at a given moment is, sometimes, simply the person who happens to pitch their services to the right seller.
robert khodadadian, skyline properties, commercial real estate, off market real estate, daniel shirazi, real estate investment, new york real estate,