Opportunity Zone investments have remained popular despite the expiration of certain tax-deferred benefits. A recent report by Novogradac revealed that Qualified Opportunity Funds (QOFs) raised $3.53 billion in equity during 2023, bringing the total amount of Qualified Opportunity Zone (QOZ) equity raised to $37.6 billion.
According to Novogradac’s findings, this number is likely even higher when taking into account private funds owned and operated by their principal investors.
In Q4 2023 alone, QOFs raised $414 million in equity following strong second and third quarters. However, this annual amount was lower than previous years due to a slowdown in multifamily housing construction caused by economic conditions.
Novogradac gathers data from public sources such as Security and Exchange Commission filings and press releases on a rolling basis for their reports on QOF activity.
The majority of known QOF investment (80%) is focused on developments that include multifamily housing. RealPage data cited by Novogradac shows that the number of apartments built within designated opportunity zones has tripled since 2016 and doubled again in 2023. Additionally, one-fifth of all new apartments delivered last year were located within an opportunity zone; however, it is expected that there will be a slowdown in multifamily permits starting late next year or early 2025 due to current economic conditions.
Other key findings from Novogradac’s report include:
– Housing-focused QOFs raised $30.93 billion with $8.10 billion solely focused on residential properties
– Commercial-focused QOFs brought in$24 .93billion with$2 .20billion coming from funds exclusively targeting commercial activities
Overall,QOZ investments continue to attract significant capital despite changes made over time.The latest figures show continued interest among investors looking for opportunities through these vehicles.
