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CRE Finance World, Summer 2012

Investors Slowing Down, But Still Following the Multifamily Road now 5.5% — or 60 basis points below the 10-year average — while prices are about 22% higher than the 10-year average. It is this drop in cap rates for mid-to-high rise properties is likely leading to the rise in concerns for real estate professionals. Meanwhile, garden-style apartments are only averaging 3% above the 10-year average. Despite this disparity, the strong demand that we’re currently seeing for urban properties will ensure that these buildings remain a solid investment with increasing revenues and lower risk levels. Chart 2 Apartments Price Per Unit Source: Real Capital Analytics While we may continue to see slight shifts within multifamily investment over the coming years, it’s clear that investors are here to stay for some time. And while supplies of properties for sale may be dwindling, the high demand for rental units in the market will ensure that investment opportunities remain positive. It may take more time for justifiably cautious investors to find and invest in these opportunities, but their interest in multifamily remains strong. A publication of Summer issue 2012 sponsored by CRE Finance World Summer 2012 43


CRE Finance World, Summer 2012
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