CBRE’s recently published Global Multifamily Investor Intentions Survey gathered data from 1,200+ commercial real estate investors worldwide, over 500 of whom specified the residential/multifamily sector as their primary target.
The survey has several key insights that stood out regarding investment allocations and strategy:
Key Insight #1 – Multifamily Most Favored Property Sector for 2024
“Multifamily once again is the most targeted real estate sector for investors in 2024, favored by 42% of global investors surveyed by CBRE vs. 30% in 2023. For the first time in this survey’s eight-year history, multifamily was the most preferred sector in all three global regions, favored by 44% of investors in the Americas, 44% in Europe and 32% in APAC vs. 37%, 25% and 30% last year, respectively.”
Key Insight #2 – Most Attractive Markets for Multifamily Investment
“U.S. Sun Belt markets were again the most favored by Americas investors, led by Dallas-Ft. Worth with 40% vs. 36% in 2023. Nashville and Raleigh-Durham tied for second, although the percentage of investors favoring them (21%) fell slightly from last year. Atlanta ranked fourth and Charlotte and Miami-South Florida tied for fifth.”
Key Insight #3 – Moderating Risk Strategies in 2024
“Forty-seven percent of multifamily investors view high-risk (i.e., opportunistic, distressed and debt) as the most attractive investment strategy in 2024, down slightly from 50% in 2023. Preference for lower-risk (i.e., core and core-plus) strategies increased to 33% in 2024 from 27% in 2023. Multifamily investors had the greatest preference for lower-risk strategies when compared with industrial investors (32%) and office investors (26%).”
Key Insight #4 – Most Investors Expect Increased Activity in H2 2024
“Nearly a third of multifamily investors expect their own investment activity to begin recovering in the first half of 2024 vs. only 9% who expect the same for the overall multifamily market. Most investors expect a recovery to begin for both their own organization and the overall market in the second half of the year. By mid-2025, nearly all investors expect that the multifamily investment recovery will be well underway.”
Key Insight #5 – Most Investors Expect Small or No Discounts for Multifamily Assets
“Fifty-eight percent of investors expect multifamily assets to have either small or no pricing discounts in 2024. Just 34% expect to see moderate-to-large discounts, down from 44% in 2023. This is second lowest percentage of any other asset type, behind industrial & logistics (25%).
Only 6% expect large discounts for multifamily and 20% expect no discounts at all. Multifamily had the highest rate (8%) of investors willing to bid above asking price, up from 5% in 2023.”
Key Insight #6 – Higher Interest Rates, Credit Availability Are Top Concerns
“Over 80% of multifamily investors cited interest rates as the primary challenge to commercial real estate investment this year. Credit availability and mismatches in buyer and seller expectations were cited as top challenges by 73% and 67% of respondents, respectively.
Half of surveyed investors cited the potential for weak tenant demand this year versus only 15% in 2023. Only 26% cited higher and more persistent inflation as a top challenge, down from 31% in 2023.”
Key Insight #7 – Investors Maintain Preferences for Multifamily Alternatives
“Student housing is the most preferred alternative sector for investors globally, particularly in Europe where half of all investors favor it. Senior housing saw a resurgence in preference this year to 23% after three years of waning interest. A third of all European investors said they are interested in the sector.
BTR/SFR was the overwhelming top multifamily alternative (39%) for Americas investors, second only to real estate debt (41%).”
Conclusion
Despite current challenges with high interest rates, CBRE's 2024 Global Multifamily Investor Intentions Survey reveals positive investor sentiment, especially for multifamily, which remained the top acquisition target amongst all real estate sectors.
Additionally, investment activity is expected to pick up in the second half of the year, with an increased focus on U.S. Sun Belt markets.
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