Real estate investors sitting on a mountain of dry powder may have to wait another six to 12 months for the lowest valuations to arrive before they pounce on a growing pool of distressed CRE assets.
Data analytics firm Preqin estimates there is a more than $205B currently earmarked for investment in CRE in the US. Meanwhile, CRE prices are heading for bargain basement prices as valuations drop: across all sectors, prices have dropped an average of 16% since their peaks in March 2022, according to Green Street data.
However, the nadir in valuations is not expected to arrive for another six to 12 months, according to the Wall Street Journal—and the opportunities for heavily discounted prices are not spread evenly across sectors, as they were after the GFC in 2008.
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