The US real estate market is currently experiencing a recovery, with positive indicators in various sectors. Interest rates have stabilized and competition for high-quality investments has increased, leading to lower spreads offered by lenders.
Transaction volumes are expected to rise and quarterly returns are turning positive in most sectors, except for the struggling office market. Despite challenges, the private real estate sector has seen a modest total return in the third quarter of 2024, driven by positive net operating income growth.
The recent US elections have created uncertainty regarding future policies, but expectations suggest a potential decrease in taxes and regulations, alongside an increase in tariffs, inflation, and interest rates. The Federal Reserve's rate cuts are significant for commercial real estate, and transaction volume needs to increase for pricing confidence.
The apartment sector is stabilizing, supported by low unemployment rates and moderating inflation. The office sector faces challenges, while the retail sector is expected to rebound and the industrial sector remains robust.
The US economy has shown resilience, with GDP growth and expectations of gradual reduction in the Federal Funds Rate. Inflation trends are noteworthy, with potential policy changes impacting inflation and the Fed's rate-cutting strategy. The interplay between interest rates, inflation, and net operating income will be critical for the trajectory of private real estate investments.