Moody’s Analytics forecasts cap rates across all real estate asset classes will expand between 2020 and 2023. Apartments (multifamily) are expected to see the most modest change, approx. 65 Bps, compared to other asset classes.
Interestingly, interest rates are expected to remain low given an expected economic contractionary period. Strong indication exists that cap rates will not move with treasury rates, pointing to deeper spreads and mitigation against inflation. Multifamily investments can continue to provide investors with strong returns and capital preservation benefits over the next few years if executed well.