INTO THE RECOVERY: IDENTIFYING CITY & SECTOR DIFFERENCES TO UNLOCK VALUE
As property value declines subside, we focus on the outlook for the 2025 global real estate landscape. While it’s difficult to ignore the ongoing narrative around needs-based demand versus supply shortages, the varying speeds in which the macroeconomic backdrops are improving around the world continue to drive distinct differences in city and sector outlooks for income growth. All these factors support an ever-increasing need for high conviction in the year ahead.
United States: We have begun a new real estate cycle that will reward early-movers. Lower debt costs alongside growing income create a favorable environment for investment across the capital stack and risk spectrum.
Mexico: Industrial returns will be supported by tight vacancies and continued rent growth, as manufacturers invest and expand to capitalize on export demand from the United States.
Europe: European real estate total returns are back in positive territory and set to improve further in 2025. Assets have repriced and capital values have started to grow on the back of resilient rental growth supported by low supply. Liquidity remains low but is expected to rise significantly in 2025 as downside risks recede and sentiment improves.
Asia Pacific: An improving regional outlook is set against country-by-country differences, but values have corrected in most markets, and we are at the start of a recovery that rewards early movers across all investment styles.
GLOBAL HIGH-CONVICTION THEMES
Our four high-conviction global themes are underpinned by the common thread of resilience and growth: resilience in performance, demographics and societal trends; growth in income, market opportunities and capital values.
- Living Sector: Needs-based real estate that meets affordability objectives, targeting growing demographic segments in preferred locations.
- Logistics: Consumer, manufacturing and logistics-driven properties; selective on size and focused on shifting global trade patterns.
- Data Centers: Ongoing favorable demand-supply dynamics due to essential digital infrastructure needs.
- Credit: Capturing opportunities to lend as transaction volumes improve.
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