According to a new report from Kroll Bond Rating Agency (KBRA), commercial real estate loan originations are expected to increase by 23.6% in 2024 compared to the previous year. This projection is consistent with the Mortgage Bankers Association’s forecast of a 25% year-over-year increase.
However, KBRA notes conflicting views for 2024, as investors interviewed by the Urban Land Institute and PwC anticipate an uptick in transaction volume while CBRE predicts a decline of 5%. The rating agency states that these divergent announcements have created uncertainty regarding CRE views and projected activity for next year.
KBRA’s projection takes into account factors such as steady interest rates and expectations for stabilization in both capital markets and CRE markets throughout the near term. This is due to more borrowers accepting lower valuations under current market conditions without any major surprises on either front.
Additionally, KBRA reports that existing loans may face performance pressure which could lead to increased loan pool sales or reemergence of securitizations of distressed debt – adding further volume not reflected in their initial forecast for 2024.
