Schroders Capital Global Real Estate Lens Q4 2024: your go-to guide to global property markets
Deal volumes and performance remain subdued, but there is evidence that pricing is recovering and sentiment is improving against a stabilised economic backdrop, which should support increased activity as we head into 2025.
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Our now-quarterly Global Real Estate Lens summarises the key data and trends for prevailing economic and capital market conditions, real estate occupier markets, and private real estate debt markets.
Overall, we have continued to see subdued transaction volumes and performance, but we are also beginning to see pricing pick up and sentiment is improving against a stabilised economic backdrop, which should support transaction volumes going forward.
Key takeaways from the Global Real Estate Lens Q4 2024 are:
Growth is forecast to remain stable over the forecast period to 2026, while inflation is likely to continue to trend lower but remain above 2% in key economies on an annualised basis.
Reinflationary pressures in the US are likely to moderate the pace of rates cuts – and could force the Federal Reserve to hike again in 2026. Similarly, across the UK and Europe we anticipate moderation in rate normalisation.
Generally tight vacancy and supply conditions are supporting real estate operating fundamentals, as well as rental growth in key markets and sectors.
Global transaction volumes remain subdued, falling 12% on an annualised basis in Q3 – but activity increased year-on-year in the US, and improving sentiment is expected to catalyse investment more widely as we head into 2025.
There is evidence of transaction prices recovering after significant falls over the past two years. More broadly valuations are also improving, with the office and retail segments turning positive and the industrial and residential segments recording consecutive quarterly growth.
Prime/Grade-A yields in the ‘traditional’ real estate sectors have increased substantially across major global metro markets this year.
Further negative global core real estate fund performance was recorded during Q2 2024, with a -1.6% fall in total return for the year to date; long-term returns remain positive.
Global private real estate fundraising has slowed dramatically from recent vintage levels, with approximately $98bn raised in 2024 to date and dry powder levels down moderately to a little over $340bn.
Fewer US banks were tightening standards in Q2 2024 – although loan standards remain historically high – and margins for commercial real estate mortgages have been stable.
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