Investor optimism at its highest level since 2015
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The results of the WMRE/Marcus & Milichap H1 2022 Investor Sentiment Survey offer a very positive outlook. Indeed, the Investor Sentiment Index shows a 5-point increase to 170, its highest level since 2015.
A number of factors are driving optimism across the different real estate investment sectors. Among them, the rental vacancy rates that are at historically low levels, but also the vaccination rate of the population that reassures investors, making them more confident that we are entering a phase of cohabitation with the virus. As a result, even some sectors that have not fully recovered from the health crisis, such as hospitality and retail, are seeing their prospects improve as people resume travel and entertainment.
The country is also seeing more and more employees return to the office, even as a "hybrid" model of splitting time between home and work is becoming more permanent. According to John Chang, director of research at Marcus & Millichap, office real estate is also expected to grow significantly. "The positive movement in the index reflects all of these dimensions - the positive trends that are already established for certain asset classes and the momentum that is underway or imminent on other sectors."
Investor confidence is also reflected in record transaction volume in 2021. Sales of commercial and multifamily assets reached $846 billion last year, a figure significantly higher than the $600 billion in 2019, according to Real Capital Analytics. The survey results show a genuine desire among investors to continue making acquisitions in the near term. More than half of respondents (54%) said they plan to purchase a new property in the next 12 months, up slightly from 50% in the same survey from the second half of 2021. Only 6% of respondents plan to reduce their portfolio. On average, respondents expect their real estate portfolios to increase by 12% in 2022.
"The level of capital flowing into U.S. commercial real estate is higher than ever, as evidenced by last year's transaction volumes," explained Evan Denner, Vice President and Head of Business at Marcus & Millichap. Consistent with the survey of six months ago, 61% of respondents continue to show "abundant" capital ready to be invested. In addition, 71% of respondents believe that commercial real estate and multifamily will offer favorable returns compared to other asset classes.
Source: WealthManagement.com, Marcus & Millichap,
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