Multifamily Ranks No. 1 as Investor Choice

Respondents to a CBRE survey saw the sector as offering the most opportunity, Lew Sichelman writes.

Lew Sichelman
Lew Sichelman

Forget steep prices and to heck with high interest rates and tight credit markets. Global investors have their sights on multifamily properties. And not just here in the Americas but in Europe and Asia, too.

For the first time in its eight-year history, CRBE’s Global Multifamily Investor Intentions Survey found that the sector was the top choice in all three global regions.

The industrial and logistics industries ranked as the second most preferred asset type, favored by 23 percent of the 1,200 or so commercial real estate investors polled. But 42 percent of global investors listed multifamily as their top choice. That’s an increase from 30 percent in the 2023 CRBE survey.

The 2024 survey was conducted late last year, but the results weren’t published until recently.

Markets investors are keen on

In the United States, the Sun Belt states were once again the most attractive, with the Dallas-Fort Worth remaining the top choice. But two new markets—Atlanta and Charlotte—entered the top five. The other top choices were Nashville, Tenn., Raleigh-Durham, N.C., and Miami-South Florida.

In the European and Asian-Pacific markets, London and Tokyo maintained their spots as top draws.

Buying and selling activity

Almost two-thirds of multifamily investor respondents expected to boost their buying activity from last year but four out of ten said they’ll sell more than they buy. Slightly more than a fourth expected to sell less.

Specifically, 38 percent of responders said that their purchasing activity would be at least 10 percent greater this year while 24 percent said it would be no more than 10 percent higher. Another 24 percent noted that it would be about the same.

As for the sellers, 34 percent said that their activity this year will be about the same as last. But 18 percent said it would be up to 10 percent greater and 22 percent noted that it would jump by more than 10 percent. 

About a third of the respondents expected to begin boosting their activity in this year’s first half, while almost half said the increase would begin sometime in the second six months.

Almost three out of five investors responding to the survey didn’t expect much in the way of price discounts: either none at all or only small ones.  But a third are looking for mid-to-large cuts. That’s down from 44 percent from 2023.

Where investors are finding opportunity

Nearly half of the apartment investors surveyed by CBRE noted that they see high-risk properties—opportunistic, distressed and/or debt—as the most alluring. That’s down from just a few points from 2023. At the same time, the temptation for lower-risk properties increased to 33 percent.

If these investors had a second choice it would be student housing, especially in Europe, where half of all respondents favored student residences. Senior housing gained steam as a secondary choice, too, again especially in Europe, where a third of investors there said they had some interest.

Among American investors, single-family rental housing or build-to-rent housing was third on the list of preferred alternatives behind real estate debt.

While the survey demonstrated optimism among investors, it’s not that they are proceeding without some trepidation. They have concerns, chief among them that interest rates may remain higher for longer. Other worries included tighter availability and loan terms. They’re troubled, too, about a mismatch between buyer and seller expectations as well as weakened tenant demand.

All these cases were labeled as “major challenges” by more than half the CBRE survey respondents.

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