In the middle of 2024, PGIM called the bottom of the real estate market. Several months later, Cathy Marcus, co-chief executive and global chief operating officer at PGIM Real Estate, is "feeling really validated".

She says: "We were saying the time was now to get back into the market and get back off the sidelines. Now, with one quarter behind us from the time we made that prediction, we are seeing that definitely coming to fruition. We are seeing transaction volumes picking up…. more capital in the market, more lenders in the market and, I would say, basically more certainty."

PGIM started to see capital appreciation in certain assets in its real estate funds in the third quarter. "It's actually quite exciting to seem pirical evidence in terms of returns on our funds being positive and also seeing transaction activity picking up," Marcus says. "So it's definitely feeling like this beginning of the new cycle is true and is really happening, and that makes us feel that next year should really be when we start to see more of the normalisation around transaction volumes."

Asked whether this is simply a product of interest rates finally coming down, Marcus says: "It is clearly a factor - and particularly the Fed's outsized decrease in rates [which were] more than some people were expecting. That's obviously a very positive factor, but I wouldn't say that that is the only reason."

*IPE Real Assets November/December 2024