Opportunity Zone investments continue to generate interest despite the expiration of certain tax benefits. According to a report by Novogradac, 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.
Novogradac’s figures do not include private funds owned and operated by their principal investors, suggesting that the actual QOZ investment may be even higher than reported.
In Q4 2023 alone, QOFs raised $414 million in equity following strong performances in previous quarters. However, this annual amount was lower compared to previous years due to economic factors such as a decrease in multifamily housing construction.
The majority of known QOF investments are focused on developments with multifamily housing components according to RealPage data cited by Novogradac. The number of apartments built within QOZs has tripled since 2016 and doubled again in 2023; however, it is expected that there will be a slowdown due to decreased permits for multifamily construction towards late-2024 or early-2025.
Novogradac also reported:
– Approximately $30.93 billion was raised by QOFs with some focus on housing; out of which $8.10 billion solely focused on residential properties.
– Around $24 .93billion was generated from commercial-focused funds; while only about$2 .20billion came from those exclusively investingin commercial activities.
Accordingly,the latest report shows thatthe overall trend forinvestment throughQOFsis still positivewitha significantamountof capital beingraisedby bothresidentialandcommercial-focusedfunds.The continuedinterestin thesevehiclesdespite expiringtaxbenefitsis indicativeoftheir potentialforlong-termreturnsandgrowth opportunitieswithinthe market.Thisreport further highlightshowtheseinvestmentsareattractinga diverse rangeof investorsandcontinueto bea viableoptionfordeferringcapitalgains.
