AFIRE, the association for international real estate investors focused on commercial property in the United States, has released its AFIRE International Investor Survey: Q1 2023 Pulse Report, underwritten by Holland Partner Group. The survey, conducted in early 2023, captures the view of institutional investors, who continue to see the United States as a preferred destination relative to Europe for real estate investment across property types, led by multifamily and industrial.
Some of the takeaways are as follows:
- The U.S. market shows stability as a preferred global destination for investment with allocations up 6 percent from 2022, relative to a 5 percent decline in European investment.
- Multifamily and industrial lead preferred property types, with office as leading concern for investors.
- New York returns to number one spot for preferred investment among U.S. cities, up from fifth in 2022; London remains top among global cities.
- 97 percent of investors agree that continued interest rate rises weigh on access to capital, limiting reasonable financing and impeding transactions.
- Hospitality rises as an attractive property type for investment among 43 percent of investors.
- 86 percent of CRE investors believe that climate risks are not yet reflected in valuations.
“The AFIRE International Investor Survey: Q1 2023 Pulse Report captures institutional investor sentiment at a moment in time; early 2023,” said Gunnar Branson, CEO of AFIRE. “While continued rising interest rates, and the future of office are identified as areas of concern at this time, investors long-term horizon enables them to balance these against opportunities, in particular the relative strength of the U.S. real estate market as a preferred global destination for investment capital.”
The report, published each year over more than three decades, provides a survey of AFIRE’s nearly 175 member organizations from 25 countries with approximately $3 trillion AUM, and serves as a timely and trusted indicator of global investor sentiment towards U.S. real estate.
Investors identified multifamily and industrial as most attractive property types, and with support for multifamily a continuing trend, some 40 percent agree they would be willing to accept a lower expected rate of return in order to invest in more attainable housing.