2023 investment sales likely to be similar to 2022 levels

Savills predicts investment sales to hit around $24b to $25b.

Property expert, Savills, said investment sales this year will likely be at the same level as 2022, adding that the  2023 Government Land Sales (GLS) program may not fully “sate the appetite of developers who have a largesse of returning capital from projects fully sold and completing soon.”

The 2023 GLS programme also has 11 sites, similar to 2022.

Taking into account this factor, Savills said investment sales will likely be around $24b to $25b in 2023.

Savills, however, underscored that the market’s development will depend heavily on whether Central Banks pivot on their current stance of raising or keeping interest rates high. 

“Presently, the all-in borrowing cost for non-recourse loans for commercial buildings is running at around 4.5% to 4.7%. With passing yields coming in at the low 3% levels, buyers will experience negative carry,” Savills said.

“With sellers still under no compunction to lower prices, the income-producing investment sales market simmered down. If rates do inflect, we may see a resumption of acquisitive activity by large private equity investors for big ticket item sales,” the expert added.