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Investors Gain Confidence as Dealmaking Resumes

July 28, 2020

Investor sentiment in the apartment market continues to recover as the U.S. limps back from the coronavirus crisis, but rent concessions are poised to increase, according to a new investor survey by Institutional Property Advisors (IPA) that closed on July 17th.

The survey of multifamily owners, operators and developers representing more than 1 million units across the U.S. finds that acquisition and disposition activity is picking up again as the market thaws, while long-term investor confidence in the market remains high. The share of investors that reported putting all acquisition activity on hold dropped from 39.6 percent in March—when the first survey in the series was taken—to 22.9 percent in May and 17.1 percent in July.

Likewise, 46.4 percent of investors said their firm was delaying dispositions in July, down almost 7 percentage points from May. As restrictions are eased across the country, more investors are permitted by their companies to travel for basic diligence activities—rising steadily from less than 15 percent in March to more than 64 percent in July.

“We are seeing an uptick in investor activity over the past 60 days,” Jeffery Daniels, senior vice president & national director for IPA’s multifamily and student housing platform, told Multi-Housing News. Daniels noted that the company’s BOV (broker opinion of value) activity has increased 400 percent from March and April and is slightly off from its levels in the first half of 2019, adding that this does not necessarily mean all of those deals will come to the market.

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