We expect disinflationary pressures to take hold and the focus of the wider investment community to shift towards unemployment. In this scenario, the durability of income in real estate will become key.
Kurt Edwards, Head of Real Estate Research & Strategy – US
Private real estate pricing and transaction volume are feeling the impact of higher cost of capital and concerns about weaker economic fundamentals. According to the NCREIF Property Index, appreciation for 3Q22 slowed dramatically from the beginning of the year. The apartment and industrial sectors depreciated by 0.41% and 0.57% respectively, compared to the lofty appreciation of 4.88% and 11.09% in 1Q22. Retail and office depreciated by 0.58% and 1.79%, respectively, in 3Q22. Transaction volume decreased by 21% YoY and bid-ask spreads are widening. We expect further pricing corrections to be widespread across the sectors and regions in 2023.
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