Investment / Real Estate
Lack of New Multifamily Starts Bodes Well for Real Estate Investors

How supply-demand factors are a real estate tailwind

01.12.2024

Rising real estate construction costs, a skilled labor shortage and significantly higher interest rates have fueled a dramatic slowdown in multifamily construction starts, now almost 30% lower compared to the second quarter of 2022 (Figure 1).

Estimates expect declines to continue throughout 2024 and beyond; within two years, new multifamily deliveries are estimated to be less than half current levels. Within the supply-demand dynamics that underpin the real estate business, a drop in new multifamily starts constrains the supply of rental properties, providing a tailwind for rents to grow—good news for investors in real estate strategies.

Image
Falling new multi-family starts

Source: FRED, CBRE, as of Q3 2023.

Disclosure Information

All investing involves risk. The value of an investment will fluctuate over time, and an investor may gain or lose money, or the entire investment. Past performance is no guarantee of future results. All real estate investments, ranging from equity investments to debt investments, are subject to some degree of risk. Real assets include real estate securities, infrastructure securities and natural resources securities.

Diversification does not guarantee a profit or protect against loss,

©2024 Brookfield Corporation.; ©2024 Oaktree Capital Management, L.P.; ©2024 Brookfield Oaktree Wealth Solutions LLC & ©2024 Brookfield Public Securities Group LLC