Despite a murky economic outlook, JLL’s recently released Global Real Estate Perspective-Highlights paints an optimistic picture. The report authors commented that while the international economy is still uncertain, there has been resilient growth with forecasts improving as the year progresses.
Capital Flows
The perspective shows that although interest rate uncertainty remains a concern, overall investor sentiment improved in the middle of the year. Some key points include:
– Interest rates: Many major markets are expecting monetary policies to ease by the end of 2024. However, there is still confusion surrounding when this will happen due to geopolitical factors.
– Pricing: Most global markets are seeing stabilization in pricing and an increase in bidder activity with more realistic pricing being negotiated.
– Debt markets: Conditions have also improved in debt markets due to greater clarity on pricing and spread compressions during 1H 2024. Lender confidence varies but is strongest for high-demand sectors.
Property Sectors
The report also focuses on global property sectors and highlights these trends:
– Office sector: There has been gradual demand recovery for office spaces with leasing volumes up by 10% compared to last year at this time. Hybrid work policies have contributed to increased leasing activities in North America and Europe while cost concerns and lower availability dampened numbers in Asia Pacific.
– Industrial/Logistics sector: Leasing volumes increased for EMEA (Europe Middle East Africa)and Asia Pacific industrial/logistics properties but stalled for North America due to record-high deliveries leading vacancy rates higher. Occupiers remain cautious about making decisions regarding leases.
Retail sector : Despite slower retail spending growth, consumer demand continues driving strength among storefronts globally.The report predicts that mature market retail spending could increase during second half of 2024 thanks largelyto rising real disposable incomes,international tourism,and anticipated economic activity increases
Residential Sector:
Investment volume continues strengthening globally.Large transactions occurredin U.S.and Europe;EMEA living investment nearly doubled its Q1 figure,while Asia Pacific investment volumes were lower than other regions but increased from previous quarter.
– Hospitality sector: Global hotel RevPAR (revenue per available room) remained high during first half of 2024 with demand normalizing in multiple markets. Business travel and international demand are driving growth while resorts and leisure destinations have seen a decline. However, European RevPAR is expected to increase due to the Paris Olympics generating record demand for the city and surrounding areas.
In summary, JLL’s Global Real Estate Perspective-Highlights shows mixed conditions globally but an improving outlook overall. Despite some uncertainty regarding interest rates and geopolitical factors, there has been resilient growth in many markets with stabilization in pricing and improved investor sentiment. The report also highlights positive trends across various property sectors including office spaces, industrial/logistics properties,residential investments,and hospitality properties.These trends suggest that there may be opportunities for investors as global real estate markets continue to recover from economic challenges.
