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Sign in Sign up for a FREE subscriptionRising insurance premiums could affect apartment valuations
Property insurance premiums are on the rise, driven up by the cost of weather-related events and other natural disasters, and that could have a significant impact on multifamily valuations. A recent blog post by Alliance Global Advisors, The Rogue Wave, noted that apartment insurance premiums could rise 20 percent on average in 2023 and up to 200 percent in high-hazard zones.
Along with rising risks of catastrophes, inflation in labor and materials also has meant rising replacement costs, adding to the rising cost of insurance premiums. Alliance asked industry experts for their views on the issue. Below are some of their key insights:
“The increase in insurance costs has a direct impact on NOI and operating costs, which affects transaction pricing. The magnitude varies based on a wide variety of factors, including the