overview
U.S. real estate is well positioned for a value recovery under many economic scenarios, after a significant value correction. But given policy uncertainty, the best opportunities remain in sectors that are least sensitive to the economic cycle.
- Our base case is for unlevered property-level returns to be 6-8% through the end of the decade, with income growth strengthening after the recent supply wave is behind us. We assume little change in cap rates over the forecast period. Returns are driven by current income and income growth.
- This returns forecast supports higher returns of about 100 basis points for levered core, and an additional 300 basis points for value-add, due to the positive effects of leverage and non-core investments such as development and asset repositioning.
- Our expectations of sector returns for new stabilized property investments are tightly bunched, reflecting the orderly repricing since the middle of 2022 that has left them all fairly valued on an absolute basis.
- On a risk-adjusted basis, sectors with less economic sensitivity are best positioned. These include sectors such as senior housing that are driven by necessity, as well as data centers that will benefit from continued investment in AI regardless of the economic cycle.
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2025 Real Estate Global OutlookHeightened uncertainty is weighing on the near-term outlook, but it has not derailed the recovery and growth story.
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2025 Regional SpotlightsThese 5 in-depth research reports articulate our distinct investment outlooks across the United States, Europe, Asia Pacific and Mexico, as well as the private real estate credit markets globally.
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