The quarterly sentiment index published by the CRE Finance Council shows a significant increase in Q4 2022. This marks the first sentiment increase since 2021.
The report, which includes balance sheet and securitized lenders, loan and bond investors, private equity companies, debt funds, servicers, and rating agencies, found that overall sentiment climbed to 68.6 last quarter. From 61.4 in the third quarter, which was the lowest level since the survey’s start in 2017. The jump represents an increase of 12%.
Despite progress in the right direction, the index is still in the negative due to the ongoing anxiety surrounding inflation, rising interest rates, and an impending recession, according to analysts with the CRE Financial Council. In addition, lenders and investors may have more difficulties in the upcoming year due to the uncertainties surrounding property valuation.Individual survey response rates were flat to somewhat better, with the biggest gains in the following areas: investor demand for assets, borrower demand for capital, and market liquidity in the CRE debt capital markets.
According to Raj Aidasani, Senior Director of Research at CREFC, members’ expectations for improved liquidity conditions increased by 18% in the fourth quarter of 2022. In Q3, 62% of respondents predicted a decrease in liquidity, while only 8% predicted an increase. However, in Q4, 18% predict better conditions while 47% predict a decline.In addition, the rising rate environment continues to weigh heavily, with 84% of respondents anticipating rates will have a negative impact on the industry in the current quarter, compared to 98% in the prior quarter, according to Aidasani.
