Verus has released its 2023 real assets outlook.
The firm expects declining interest in natural resources. Commodity-related investments experienced a marked rebound in performance in 2021 and 2022 after years of disappointing performance. Oil and gas companies rode high as they outperformed every other sector in the equity universe. Despite this renewed attention, the fundraising environment for natural-resource funds remains bleak.
In addition, there will be dislocations in commercial real estate because of the mid-2022 reversal of the multi-decade decline in interest rates. Private real estate cap rates have not kept pace with the move to higher rates recently, reflecting a reluctance to mark assets to the new rate regime. Over the near term, Verus expects rising cap rates, slower growth, and higher borrowing costs to continue to pressure private real estate valuations and likely trigger pockets of stress and distress.
To read the full report,