Welcome to our Real Estate Market Outlook 2023. In this report, we take stock of the past year in the real estate investment market, and explore what 2023 has in store. 2022 was a turbulent year, marked by much uncertainty on the market. Many investors slammed on the brakes, and investments stalled as a result. That hesitation is likely to linger for a while, especially in early 2023. Unnecessary, because this market is actually full of opportunities.

Uncertainty reigned 2022 was dominated by unprecedented rapid increases in interest rates, skyrocketing inflation and extreme volatility. This led to what seemed like contradictory situations in the market, with many investors reducing their risk by slowing down, while a few others saw golden opportunities. Regardless of their strategy, almost everyone expected – or at least hoped – that this would be a temporary downturn. It is now clear that this is a structural trend that will not go away overnight. Gradually, we are coming to accept this as the ‘new normal’, to which many are still struggling to respond.

Yet another new normal However, this is not at all an unexpected development. In the period prior to the 2008 crisis, policy rates always fluctuated between 1% and 3%. It then dipped below zero after 2009, due to all the economic stimulus measures. But because negative interest rates are unnatural, correction was on the cards for some time. We are now finally moving towards reasonable long-term averages again.

Inflation is rising, there is less money in circulation and interest rates are rising. The higher financing threshold is resulting in real estate depreciation, especially for owners who purchased during or after 2019. Everyone who became an owner before that is still achieving a positive result. The market is shifting towards a new and healthier balance between asking price and supply, and between interest rates and returns.

Well-placed optimism Investors will have to adapt to this new reality. They can start by taking stock of what this economic situation means for their operations, assets and returns. If they then look around carefully, they will see plenty of opportunities in this market. New interest rates are facilitating higher yields, which means that real estate is once again an appealing investment product. There is plenty of real estate for sale within all sectors, from prime to value-add, while many players continue to sit on their hands due to uncertainty. There is no more perfect moment than now to buy real estate at an attractive price. Whereas investors often felt they were consistently overpaying up until 2022, it is now possible to buy something with a return that matches the risk. That makes investing much more pleasant.

Our Market Outlook is optimistic about the opportunities for real estate investors in this new market. We hope that it helps you in determining your 2023 investment strategy.