Lee Menifee, Head of Americas Investment Research at PGIM Real Estate, shares that the 2024 Real Estate Outlook predicts a continued trend of lower property values and sluggish activity in the coming year. Despite initial hopes for improvement due to steady long-term interest rates in summer 2023, bond markets had other plans for real estate.
The report highlights ongoing challenges such as debt scarcity leading to decreased transaction volume and a bid-ask standoff between buyers and owners. However, there are also positive factors such as resilient property revenues thanks to a full-employment economy with rising wages.
While distress is expected in certain sectors like multifamily properties with loans coming due soon, it is unlikely that there will be widespread foreclosures or give-backs. Instead, opportunities may arise for recapitalization or rescue capital investments.
Overall, investors can expect a slow start to 2024 but an increase in attractive investment opportunities later on as debt pressures mount and sellers become more motivated. The key takeaway from Lee Menifee’s analysis is the need for adjusted expectations when it comes to valuation declines in the current market climate.
