In August, all major property sectors experienced annual price declines, with apartments leading the way and industrial seeing the smallest drop. According to MSCI Real Assets’ latest report, this trend was driven by a decrease in deal activity and rising interest rates.
The RCA CPPI National All-Property Index showed a 9.9% decline from last year but remained unchanged from July. MSCI attributes this to the current environment of higher borrowing costs and reduced deal volume compared to 2022.
Despite these challenges, there were signs of improvement as prices only fell by 0.5% on an annualized basis between July and August of this year. However, MSCI notes that investors felt the impact of changing interest rates during Q4 2022 and Q1 2023 when prices saw their steepest monthly declines.
Overall, CRE deal volume continues to ebb in August as pricing remains under pressure due to market conditions.
