Despite a murky economic landscape, JLL’s recently published Global Real Estate Perspective—Highlights presents an optimistic perspective. While the global economy remains uncertain, the report authors from JLL noted that growth has proven to be resilient and forecasts have been revised upwards throughout the year.
Capital Flows
The report indicates that while interest rate uncertainty is still a concern, overall investor sentiment improved in the middle of 2024. Additionally:
– Interest rates: Many major markets are expecting monetary policies to ease by the end of this year; however, there is still confusion regarding timing due to geopolitical factors. Despite this uncertainty, momentum is expected to increase with early signs of improvement in real estate markets.
– Pricing: In most global markets, pricing continues to stabilize as bidder activity increases and negotiations become more realistic. The report states that pricing has stabilized at levels seen since earlier this year and there are indications of yield compression in parts of North America,
Asia Pacific,and Europe.
– Debt Markets: Conditions for debt financing have also improved due to greater clarity on pricing and spread compressions during 1H 2024.The report notes that lender confidence varies but is strongest for high-demand sectors.Therefore,lenders continue focusing on loan workoutsand refinancing.
Property Sectors
The perspective also highlights trends within different property sectors aroundthe world:
– Office Sector: There has been gradual recoveryin demandfor office spaceas leasing volumes trended10% higher than lastyear.However,stabilizing hybrid work policies contributedto leasing activitiesin North Americaand Europewhile cost concernsand lower availability dampened numbersin Asia Pacific.
– Industrial/Logistics Sector:The EMEA (Europe,Middle East,and Africa)region sawan increaseinleasingvolumesfor industrial/logistics propertieswhileNorth Americastalleddue torecord-high deliveries leadingtohigher vacancyrates.Accordingly,the reporthighlights occupiers’cautionwhen making decisions about leases.
Retail Sector: Despite a slowdown in retail spending growth, ongoing consumer demand continues to drive strength in the sector. The report predicts that retail spending will increasein mature markets during 2H 2024 due to rising real disposable incomes, international tourism,and an expected boost ineconomic activity.
– Residential Sector: The global living investment market is strengthening with significant transactions occurring in the U.S.and Europe. In EMEA,the report notes that living investment nearly doubled from Q1 figures while Asia Pacific saw lower investment volumes comparedto other regions;however,it did show improvementfromthe previous quarter.
– Hospitality Sector: Global hotel RevPAR (revenue per available room) remained high during the first half of 2024 but has since normalizedin multiple markets.The main drivers of this growth are business travel and increasing international demand; however,resorts and leisure destinations have seen a decline except for European RevPAR which is expected to increase due to anticipated record demand for Parisand surrounding areasduringthe upcoming Olympics.
Overall,the JLL Global Real Estate Perspective—Highlights paints a positive outlook despite mixed economic conditions aroundtheworld.It highlights improvementsin capital flows,predicts stabilizationof pricing,and identifies trends within different property sectors globally.
