Despite a murky economic landscape, JLL’s recent release of the Global Real Estate Perspective-Highlights paints an optimistic outlook. While there is still some uncertainty in the international economy, the report authors from JLL commented that growth has proven to be resilient and forecasts have been revised upwards as the year progresses.
Capital Flows
The perspective highlights that although interest rate uncertainty remains a concern, overall investor sentiment improved during mid-year. Additionally:
– Interest rates: Many major markets are anticipating easing monetary policies by the end of 2024; however, there is still confusion surrounding timing due to geopolitical factors. Despite this, momentum is expected to increase with early signs of improvement in real estate markets.
– Pricing: In most global markets, pricing continues to stabilize with increased bidder activity and more realistic pricing being factored into negotiations. The report notes that prices are now stabilizing at levels seen since the beginning of 2024 and yield compression can be observed in parts of North America,
Asia Pacific,and Europe.
– Debt Markets: Conditions in debt markets are also improving due to greater clarity on pricing and spread compressions during Q1-Q2 2024.The report states that lender confidence varies but remains strongest for high-demand sectors.However,lenders continue
to focus on loan workoutsand refinancing.
Property Sectors
The report also focuses on global property sectors highlighting trends such as:
– Office Sector: There has been gradual demand recovery withinthe office sectorwith leasing volumes trending10% higher than last year at this time.Stabilizationof hybrid work policies contributedto leasing activitiesin North Americaand Europe while cost concernsand lower availability dampened numbersin Asia Pacific.
– Industrial/Logistics Sector : Leasing volumesincreased for EMEA (Europe,Middle East,and Africa)and Asia Pacificproperties,but stalledforNorth American properties.Record-high deliveries across all regions resultedina rise invacancy rates.Additionally,the reportsuggests that occupiers are exercising caution when making leasing decisions.
– Retail Sector: Despite a softening of retail spending growth, ongoing consumer demand continues to drive strength in storefronts.The report predicts that retail spendingin mature markets will increase during the second half of 2024 due to rising real disposable incomes,international tourism,and an expected boost in economic activity.
– Residential Sector: The global living investment market is strengthening with large transactions occurring in North America and Europe. EMEA living investments nearly doubled from Q1 figures while Asia Pacific saw lower investment volumes but an increase from the previous quarter.
– Hospitality Sector : Global hotel RevPAR (revenue per available room) remained high during the first half of 2024,with demand normalizingin multiple markets.Business travel and growing international demand were major contributors,but resorts and leisure destinations experienced a decline. However,the report authors believe European RevPAR will see an increase due to anticipated record demand for Paris surroundingthe upcoming Olympics.
Overall,while there are mixed conditions within the international commercial real estate market,JLL’s Global Real Estate Perspective-Highlights offers a positive outlook for future growthand improvement across various sectors.
