Political uncertainty is weighing on investor sentiment, according to a special report by Marcus & Millichap. The firm’s investor sentiment index edged slightly lower to a reading of 150 from 153 in fourth quarter. The sentiment index has been tapering since peaking at 179 in 2014.
Uncertainty related to the new Trump administration, modest tightening in capital markets, property price increases and the mature market cycle are some of the key reasons behind the decline in sentiment.
Overall, nearly half of respondents still have confidence in the economy and a positive lift from a Trump administration, but there has been a noticeable pullback in sentiment compared with the fourth quarter survey, which was taken immediately following the presidential election.
“There are a lot more questions today about how the Trump administration is going to fuel growth,” says John Chang, first vice president of research services at Marcus & Millichap.
Overall, real estate fundamentals owners are optimistic values will continue to increase during the next 12 months. Industrial investors remain confident, with 64 percent believing values will rise, followed by apartment investors at 58 percent, hotel investors at 51 percent, office investors at 41 percent and retail investors at 30 percent. Average expected appreciation for industrial is 5.1 percent, followed by hotels at 3.9 percent, apartments at 3.8 percent, office at 1.6 percent and retail at 0.3 percent.
To read the full report, click here.