Investors More Bullish About Multifamily Than Ever

Despite a host of challenges—rising interest rates, less credit availability and the possibility of a recession—investors feel positive about the multifamily asset class, according to a new survey from CBRE that was conducted in late 2022. Taking part were almost 1,400 commercial real estate investors. The bottom line is that they believe that multifamily fundamentals will remain stable during the year. Moreover, any price declines will be the lowest of all the commercial real estate sectors, making multifamily buildings a ripe acquisition target for the first time in the survey’s seven-year history.

A strong 72% of respondents expect to invest in their region of origin this year while 16% target North America, which is down from 24% last year. A smaller number of 6% expect to invest in Europe, which is up from 1% last year. The remaining investors are looking at developed and emerging Asia.

In the U.S. the Sun Belt regions won out, led by Dallas/Ft. Worth with 36%, which was the same last year. On its heels came Austin at 32%, then Miami/South Florida, Nashville and Raleigh-Durham. Meanwhile, survey respondents from APAC favored Tokyo for multifamily investment. Second spot went to Singapore and Shanghai for a tie. For EMEA respondents, London was the choice, up 26% from the year before, followed by Paris, then Berlin and Amsterdam.

 Respondents also named multifamily as the most preferred property type for the first time in this survey’s seven years. Thirty percent of survey respondents favored it this year, up from 23% in 2022. It led both industrial and logistics at 28%. And by region, multifamily was chosen by 37% of investors in the Americas, 25% of EMEA and 22% of APAC investors. Office declined to 19% and retail was at 8%, Hotels/resorts went up by 10% from 3% in 2022.

In the multifamily category, student housing retained its top spot globally, followed by seniors housing and then affordable housing. As a multifamily alternative, BTR/SFR was the top choice but was only offered as a choice to Americas respondents.

What Concerns Investors the Most 

Rising interest rates cause concern among 70% of respondents when it comes to commercial real estate investment. Other challenges cited were credit availability and the possibility of a recession, the latter two mentioned by 50% of respondents. Inflation came in next among 31%.

 When it comes to the biggest risk strategies this year, what were cited were high-risk opportunistic, distressed and debt-investment strategies by 50%. Only 8% mentioned core strategies as the most attractive.