GLOBAL MARKETS ARE AT A TURNING POINT
Global real estate values have been through a great reset. However, with monetary conditions easing and investment liquidity improving, the market is reaching a turning point. The outlook is brightening and 2024 represents a compelling entry point for global real estate across the risk spectrum. With city and local market dynamics returning to prominence, structural opportunities around longer-term investment themes, alongside tactical opportunities resulting from a dislocated market will equip investors with the means to construct a resilient, growth-driven portfolio for the next cycle.
Several key factors give us conviction that global real estate markets are approaching a turning point:
- Looser monetary conditions. As a capital-intensive industry, a reduction in borrowing costs via lower interest rates is set to ease the strain on investors.
- Historical precedent. Values have started to turn a corner – the pattern is consistent with past cycles, pointing to a stabilization this year and return to growth in 2025.
- The repricing is nearly done. Based on our modeling, most of the effect of past interest rate increases has now been factored in. Yields are already very close to our target acquisition range.
- Low supply, solid occupier markets. Despite recession risks, occupier strains have been limited by ongoing jobs growth resilience and low development activity. Rental growth remains resilient.
Explore latest themes and more in PGIM Real Estate’s 2024 Global Outlook.
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