IN FOCUS6-8 min read
Schroders Global Real Estate Lens April 2023: your go-to guide to global property markets
Our latest analysis highlights the key data and trends that matter to global real estate investors.
Lees volledig rapportSchroders Global Real Estate Lens April 2023: Tight vacancy and supply conditions prevail
16 Pagina's
Autheurs
Kieran Farrelly
Global Chief Investment Officer, Real Estate & Head of Real Estate Solutions
Current market circumstances and the economic outlook mean pressure on the pricing of real assets globally is likely to continue over the coming months, especially in light of recent events in the banking sector and the risk of this triggering broader contagion effects. Fringe markets and secondary assets remain most susceptible to anticipated declines.
April’s Lens highlights the following:
- Schroders Group continues to see high inflation forcing real growth lower during 2023. Global economic growth is losing momentum and remains set for its weakest year since the Global Financial Crisis (when excluding the pandemic)
- To counter prevailing high inflation, monetary policy is having to become restrictive. However, policymaker focus could shift to supporting economic activity, with potential rate cuts later in 2023, especially in light of recent market events.
- Real estate capital markets remained subdued, highlighted by global private real estate fundraising slowing dramatically during the first quarter of 2023. Should this level of activity continue through the remainder of 2023, then fundraising will be approximately 40% of 2022 levels.
- Despite this, private equity real estate fund dry powder levels marginally increased, highlighting the slowdown in investment volumes.
- Commercial real estate yields have increased substantially across major global markets since the first half of 2022 and with bond yields edging down from end 2022 levels, positive spreads have returned across several markets.
- Lead US commercial real estate transaction price data highlighted further falls over the month of February of 1.4%, taking declines to 18% from their March 22 peak.
- The impact on valuations was visible in accelerating, negative global real estate fund performance during the fourth quarter of 2022, with core and non-core funds posting -4.5% and -3.1% total returns respectively. Funds in Asia Pacific showed positive performance reflecting a broader recovery in the region with Europe and the US dragging down the global aggregates.
- Despite not reflecting the most recent banking sector events, Federal Reserve survey data posted at the end of March 2023 showed that US banks further tightened their standards for commercial real estate lending at levels consistent with those observed during prior phases of significant market volatility such as the GFC and pandemic periods.
Lees volledig rapportSchroders Global Real Estate Lens April 2023: Tight vacancy and supply conditions prevail
16 Pagina's
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Autheurs
Kieran Farrelly
Global Chief Investment Officer, Real Estate & Head of Real Estate Solutions
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