Schroders Capital Global Real Estate Lens June 2024: your go-to guide to global property markets
Our latest analysis highlights the key data and trends that matter to global real estate investors.
Autheurs
We are pleased to provide you with the June edition of our monthly Global Real Estate Lens summarising the key data and trends for prevailing economic and capital market conditions, real estate occupier markets, and private real estate debt markets.
Current market circumstances and the economic outlook are likely to continue to lead to some pressure on pricing of real estate assets globally over the coming months, although green shoots are arising given the fact that material inflation is easing and forward interest rate curves in the major markets are suggesting levels have peaked. Although uncertainty remains especially in light of recent geopolitical events and the risk of this triggering broader contagion effects, we believe that interesting investment opportunities are starting to arise in selected parts of the markets where strong fundamentals prevail. Fringe markets and secondary assets remain most susceptible to anticipated declines as investors and banks alike are looking to de-risk portfolios.
June’s Lens highlights the following:
- Schroders Group projects inflation to moderate to within a 2-4% p.a. band across a wide set of markets through end-2025 given easing price pressures.
- We expect monetary policy to loosen with rate cuts being anticipated in 2024 as the growth and inflation dynamic shifts.
- Global trading conditions continue to be impacted by the prevailing environment, as flash PMIs remain weak albeit the most recent datapoints show recoveries.
- Occupier demand for office and logistics space continued a modest slowdown during the fourth quarter, but relatively tight vacancy and supply conditions prevail, especially for high quality space and most notably in the industrial/logistics sector, ultimately leading to continued rental growth.
- There are exceptions to this in certain major Asian office markets where rising vacancy and near-term deliveries of new supply are leading to office rents trending down.
- Investment activity remained very subdued during 2023 with volumes in major markets around the level last seen during the GFC, but early evidence suggests that transaction activity is picking up in 2024.
- During Q1 2024, according to MSCI Real Capital Analytics data global transaction volumes declined by an annual 30%. US and European activity fell sharply in the first quarter of 2024 by 20% & 22% respectively compared to Q1 2023. Volumes in Asia Pacific held up better albeit they showed an equivalent decline of 14%.
- Further declines in transaction pricing were recorded during the first quarter of 2024, according to Green Street Advisors data. Both Europe and the US have experienced significant annual falls of 5% and 12% respectively with office prices falling furthest in both regions.
- Global private real estate fundraising has slowed dramatically during 2024 to date, with Preqin registering $56.8bn of new capital raised, materially behind the pace of activity in recent vintages. Dry powder levels have decreased moderately to $380.8bn YTD and are now meaningfully below YE 2022 peak.
Subscribe to our Insights
Visit our preference center, where you can choose which Schroders Insights you would like to receive.
Autheurs
Topics