Intelligent Investment
Rising Interest Rates Curb Q3 Global Investment Activity
November 9, 2023 3 Minute Read

Executive Summary
- Global commercial real estate investment volume fell by 51% year-over-year in Q3 2023 to US$142 billion. Volume fell by 53% in the Americas, 54% in Europe and 30% in Asia-Pacific.
- Investment totals for all major property sectors fell year-over-year in Q3.
- Rising interest rates and tight credit conditions, along with expectations of slower economic growth in the U.S. and Europe, likely will further reduce commercial real estate investment activity through the first half of 2024.
- CBRE forecasts that global investment volume will decrease by 44% this year before stabilizing in 2024.
Global commercial real estate investment declined by 51% year-over-year in Q3 to US$142 billion. Investment fell by 53% in the Americas, 54% in Europe and 31% in Asia-Pacific. Rising interest rates in many countries contributed to the drop in investment activity.
Multifamily investment volume fell by 59% year-over-year in Q3 to US$37 billion, while industrial investment dropped by 44% to US$32 billion. Office investment fell by 63% to US$26 billion, with relatively weak fundamentals and a lack of liquidity. Retail investment dropped by 35% to US$25 billion.
Figure 1: Global Commercial Real Estate Investment Volume, Q3 2023 (US$ Billions Floating)
Source: CBRE Research, MSCI Real Assets, Q3 2023.
Rising Interest Rates Stall Investment in the Americas
Americas commercial real estate investment volume fell by 53% year-over-year in Q3 to US$86 billion, largely due to rising interest rates, a tighter lending environment and expectations for an economic slowdown.
Multifamily led all sectors with US$30 billion in Q3 investment volume, down by 61% from a year ago. Multifamily investment is expected to remain somewhat resilient since higher mortgage rates favor renting over owning a home. Nevertheless, some markets are at risk of overbuilding and value-add properties are expected to have difficulty in refinancing next year.
Industrial investment fell by 43% year-over-year to US$21 billion, although continued strong demand for industrial space, particularly from e-commerce operations, is expected to boost investor interest over the near term.
Office investment fell by 63% year-over-year in Q3 to US$12 billion. Credit availability for office acquisitions was the tightest of any sector and investors remained concerned over future occupier demand. Sellers’ acceptance of lower prices for Class B and C office assets in some markets will drive some investment activity in the near-term.
Retail investment fell by 31% year-over-year in Q3 to US$16 billion. Consumer spending has remained remarkably resilient this year but diminishing savings and the resumption of student loan payments likely will weaken U.S. retail spending in the near term. However, a lack of new supply will lessen any deterioration in retail real estate fundamentals.
Figure 2: Property Sector Share of Global Investment Volume
Source: CBRE Research, MSCI Real Asets, Q3 2023.
European Investment Volume Drops for Seventh Consecutive Quarter
Commercial real estate investment in Europe fell by 54% year-over-year in Q3 to US$36 billion, largely due to higher interest rates and slower economic growth.
Office investment in Europe fell by 66% year-over-year in Q3 to US$9 billion. Despite a higher return-to-office rate than the U.S., many European companies are reevaluating their space requirements, which has reduced demand for lower-quality office assets. Demand for prime office assets remains relatively strong.
Investment in European industrial assets fell by 55% year-over-year to US$7 billion. The overall industrial vacancy rate increased slightly as expansion by e-commerce companies slowed. Nevertheless, average industrial rent continued to grow.
European retail investment declined by 52% year-over-year in Q3 to US$6 billion. Although European consumers still have excess savings, persistent inflation and slower economic growth will lower consumer confidence.
Multifamily investment in Europe fell by 49% year-over-year in Q3 to US$6 billion, the lowest quarterly investment total for the sector since 2013.
Asia-Pacific Investment Remains Resilient
Asia-Pacific (APAC) investment volume fell by 30% year-over-year in Q3 to US$20 billion. Investment volume was largely driven by a rise in retail and hotel acquisitions.
APAC office investment fell by 61% year-over-year in Q3 to US$6 billion—the lowest quarterly total since 2011. Further repricing of office assets is expected in the near term, particularly in the Pacific and Hong Kong.
APAC industrial investment fell by 9% year-over-year in Q3 to US$4 billion. Long-term leases began to take precedence over short-term leases in the region. While industrial investment activity is expected to be somewhat muted in Q4, core funds will continue to target markets with stronger rent growth prospects, such as Australia and Singapore.
Retail investment in APAC fell by 15% year-over-year in Q3 to US$4 billion. Large asset acquisitions in Japan, Australia and Singapore drove activity in the sector.
Global Forecast
We expect that high interest rates and tight credit conditions will continue to limit commercial real estate investment activity through the first half of 2024. CBRE forecasts total global commercial real estate investment volume next year will match 2023’s total, with a 5% decrease in the Americas, a 5% increase in Europe and a 5%-to-10% increase in APAC.
Figure 3: Global Investment Volume by Sector (US$ Billions Floating )
Source: CBRE Research, MSCI Real Assets Q3 2023.