A 12-year investment cycle fueled by historically low rates is coming to an end as private real estate reprices.
- Private real estate, facing a slowing economy and higher financing costs (due to higher rates intended to tame inflation), has reached a pivotal moment.
- Private real estate transaction volume has plummeted, and performance has lagged listed real estate for a third consecutive quarter. We expect significant repricing to create favorable entry points for investors – but these will demand judgement and selectivity.
- We expect valuations to decline in the area of 20% overall, but this will vary across property types. The weakest properties (older properties in gateway coastal markets) will be hit hardest and the strongest properties (newer, amenity laden real estate in sunbelt locations) will be the most resilient to rebound.
James Corl, Head of Private Real Estate, Cohen & Steers
Anthony Corriggio, Portfolio Manager, Private Real Estate, Cohen & Steers
Hamid Tabib, Head of Real Estate Acquisitions, North America, Cohen & Steers