Real estate investors in 2024 face a string of economic disturbances and ongoing conflicts in Europe and Asia, according to a report by Finalis. The sector has been rocked by the U.S. Federal Reserve's interest rate hike strategy to cool inflation, a looming fear of corporate bankruptcies, geopolitical unrest and waning consumer sentiment, Finalis said, with private markets also at a turning point.

Factors impacting the investment market this year include:

• The new interest rate regime prompts a review of portfolio construction as compressed risk premiums have become a consequence to a period of low and declining interest rates;
• Long-term U.S. Treasury bond yields have changed, now ranging between 3.5% and 4.5%;
• This has resulted in a readjustment in required returns for risk assets, causing typical portfolio optimization performance targets for institutional investors to shift from 7% to 9%, as cash fell out of favor;
• Credit conditions are tightening, leading to a decline in transactions, impacting the exit environment and reducing distributions to Limited Partners (LPs) of private funds;
• The pace of new commitments across all asset classes of private funds are slowing due to the lack of cash returns from existing funds;
• Despite the enthusiasm surrounding generative AI in VC, there is a reassessment of valuations;
• Leveraged buyout (LBO) models are grappling with the highest cost of capital in over a decade;
• Within real estate, the office property market is in the early stages of a recession.

Despite the sector setbacks, Redfin said the U.S. economy recorded a robust real GDP growth of 5.2% annualized for third quarter of 2023, posting the strongest outcome since 2020. The Fed is also expected to begin reducing rates in 2024. The slideshow above illustrates expert tips and advice for buying an investment property for the first time, as selected and compiled by Redfin. See also: