Global Real Estate Perspective August 2024

Global economic conditions remain mixed, but growth has proved to be resilient with forecasts revised up as the year has progressed. Falling inflation and an easing monetary policy environment, combined with solid labor markets, should deliver further improvements to the outlook through the second half of the year and into 2025.

Occupier activity has continued to improve in office markets, with global leasing volumes rising by 10% from the previous year. In the logistics sector tenants remain cautious but take-up increased in Europe and Asia Pacific following a slow start to the year. Retail and hospitality demand has stayed resilient, underpinned by the return of real wage growth in many countries and rising international travel.

Investor sentiment is more positive at mid-year compared to late 2023, as many of the largest markets are expecting easing monetary policies by year-end. Debt market conditions continue to improve and broaden, as origination volumes stabilize and the cost of debt comes in further. Over the first half of the year, bidder activity in aggregate is increasing significantly, although market conditions differ due to the higher rate environment. Investor propensity to transact is greater in markets where price adjustments are more transparent, and pricing is now stabilizing at levels observed since the start of the year in many markets.

Between persistent uncertainty around the timing of interest rate shifts and geopolitics, risks remain highly dynamic and could introduce volatility and impact market sentiment in the second half of the year. Notwithstanding the risk of further stalling, momentum is expected to pick up as the year progresses, and there have been early signs of an inflection point in real estate markets.