2023 Trends: Q2 22 to Q2 23

The real estate market in 2023 has provided us with critical data points giving us huge insights into how the world is dealing with the uncertainty abounding…

Thanks to CBRE for providing great research on Real Estate Investment data points and trends.

– **Global Real Estate Trends**: We’ve observed a marked reduction in investment volumes by 57% to US$142 billion. 👎  This sharp decline underscores the challenges posed by current economic conditions, stringent credit terms, and heightened interest rates which have collectively dampened investor enthusiasm.  Getting a loan is really challenging and here are the results.

– **Multifamily Sector**: Even amidst a 66% downturn, the multifamily sector remains paramount as the largest share of investments for any asset class.  This reinforces our hypothesis that residential investments, particularly in multifamily dwellings, continue to be viewed as relatively safe assets, especially during economic downturns.

– **Industrial Real Estate**: It leads the pack with only a mere 41% decline in this sector, compared to others, highlights its intrinsic strength. This resilience or “least declining share of investment” can be attributed to the ongoing demand for warehousing and logistics, particularly in the e-commerce era.

– **Outlook for 2024 by CBRE**: The anticipated recovery beginning in 2024 indicates that current downturns are potentially temporary. With economic stabilization and clearer lending rate prospects, we can expect a rejuvenation in commercial real estate investments.

To summarize, the 2023 metrics, while challenging, show opportunities are starting to arrive.  What does it mean when a 66% downturn in activity is still an improvement over other categories?  Office is getting hammered in historically safe harbours like Class A Core.  Think NYC, SFO.  Vacancies are tremendous.  Multifamily is off it’s trading volume by 2/3rds of last year.  Reading the tea leaves, I’d say there is a flight to Shelter as a safe place to invest in real estate.

It’s too early to know for sure, but I believe it paves the way for informed decision-making.

A strategic, long-term approach is recommended for navigating these evolving landscapes.

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