Institutional Investors Lower Expectations on Real Estate Holdings, Survey Shows

Originally published on September 19, 2022, by Michael Tucker for the Mortgage Bankers Association.

Institutional investors are lowering their real estate return expectations, the Pension Real Estate Association reported.

Respondents to a PREA survey said they expect an 8.8 percent total return across property types this year (including income) and 4.4 percent next year. In the same PREA Consensus Forecast Survey six months ago, investors reported they expected a 9.5 percent total return for full-year 2022 and 8.0 percent in 2023.

MBA Vice President of Commercial Real Estate Research Jamie Woodwell said investors continue to work through what recent economic changes will mean for the space, equity and debt markets and how they could affect commercial real estate. “Outlooks continue to vary by property type, especially in terms of what might happen to property values in coming years, with uncertainty around return-to-work for office properties bringing the greatest scrutiny,” he said.

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