Key Takeaways
- • Hines Global CIO David Steinbach advises investors to buy existing properties and focus on income, arguing that higher borrowing costs are squeezing new construction and creating rental opportunities.
- • Steinbach urged investors to underwrite deals on fundamentals of supply and demand rather than on going-in rates alone, according to an interview with Bloomberg.
- • Higher mortgage rates are pushing more households to rent, while insufficient new housing construction leaves an undersupply that Steinbach says lacks the oversupply risk seen in previous cycles.
- • Hines sees improving real estate fundamentals globally, and Steinbach highlights markets where constrained construction could support rental growth.
Summary
Hines Global Chief Investment Officer David Steinbach sees an opportunity in the current squeeze on housing and new real estate development. Higher borrowing costs are making housing less affordable and new construction harder to finance and deliver. In his view, investors should buy existing properties, prioritize income, and target markets where limited construction could support rental growth, according to an interview with Bloomberg.
Steinbach argued that investor attention on interest rates can obscure property-level opportunities. He urged investors to weigh "fundamentals versus simply just the going-in rates" and to underwrite investments around demand and supply rather than rate movements alone. Hines sees improving real estate fundamentals worldwide, he said.
In residential markets, Steinbach said higher mortgage rates are driving more people to rent rather than buy. Bloomberg's Avril Hong asked whether rapidly rising Treasury yields and mortgage rates were worsening housing problems. Steinbach responded that the rate environment also creates opportunities for rental investors. "It's actually driving more people to rent than buy, and for a lot of investors, that's actually an opportunity because at the same time, while there is an undersupply of housing, there's not enough housing being built currently, and so there is no oversupply hang that we've had in previous cycles," he said.
This combination of rising rental demand and constrained new supply underpins his case for acquiring existing assets rather than building new ones.
Steinbach argued that investor attention on interest rates can obscure property-level opportunities. He urged investors to weigh "fundamentals versus simply just the going-in rates" and to underwrite investments around demand and supply rather than rate movements alone. Hines sees improving real estate fundamentals worldwide, he said.
In residential markets, Steinbach said higher mortgage rates are driving more people to rent rather than buy. Bloomberg's Avril Hong asked whether rapidly rising Treasury yields and mortgage rates were worsening housing problems. Steinbach responded that the rate environment also creates opportunities for rental investors. "It's actually driving more people to rent than buy, and for a lot of investors, that's actually an opportunity because at the same time, while there is an undersupply of housing, there's not enough housing being built currently, and so there is no oversupply hang that we've had in previous cycles," he said.
This combination of rising rental demand and constrained new supply underpins his case for acquiring existing assets rather than building new ones.
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