Investor Predictions for 2023

Matthews™  measured investor insight in a recovering market. With a potential recession looming, CRE investors are somewhat concerned about rising rates and their effect on investments. 43% of respondents believe the biggest consequence of rising rates is the effect on real estate valuations, and most respondents believe the U.S. will enter a recession.

Overall, there is a negative outlook for the capital raising & debt market in 2023. Capital market expectations are below average, CRE/CMBS delinquencies will worsen, and there are worries about liquidity available to finance new deals. Rising inflation, interest rate increases, and availability and cost of capital remain the top concerns for 2023.

Investment Approaches

In response to rising rates, investors are either holding onto assets (38.54%) or expanding portfolios (37%). Allocation of capital commitments will most likely remain unchanged or will increase, compared to 2022. Right now, the best time to buy is late 2023, as 2023 sales and leasing activity is going to worsen.

Property Type Predictions

Majority of investors (57.84%) believe the office sector will face the most distress in 2023,  and the multifamily sector will face the least distress (49.26%).