Despite a challenging economic climate, JLL’s latest Global Real Estate Perspective—Highlights report offers an optimistic outlook. While the global economy is still facing uncertainties, the report authors note that growth has remained resilient and forecasts have been revised upwards throughout the year.
Capital Flows
The perspective highlights that while there is still uncertainty surrounding interest rates, investor sentiment has improved in recent months. Some of the largest markets are expected to see monetary policy easing by the end of 2024; however, there remains confusion regarding timing and 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 notes that pricing levels have stabilized since earlier this year with indications of yield compression 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 1H 2024. Lender confidence varies but remains strongest for high-demand sectors. However refinancing efforts continue to be a focus for many borrowers.
Property Sectors
The report also examines trends within different property sectors globally:
Office: Demand recovery continues gradually within office spaces as leasing volumes trended higher than last year by about 10%. Hybrid work policies stabilizing contributed towards increased leasing activities in North America & Europe; however cost concerns & lower availability dampened numbers across Asia Pacific region.
Industrial/Logistics: Leasing volumes increased slightly for EMEA & Asia Pacific industrial/logistics properties but stalled for North American counterparts due record-high deliveries leading up vacancy rate boost across all regions . Occupiers remain cautious when making decisions related lease agreements according to JLL.
Retail: Despite slower retail spending growth , consumer demand persists driving strength among storefronts . The forecast suggests mature market retail spending could rise during second half driven by rising real disposable incomes, international tourism & increased economic activity.
Residential: The global living investment market continues to strengthen with major transactions taking place in the US and Europe. EMEA saw a near doubling of living investments from Q1 figures while Asia Pacific volumes were lower but still higher than previous quarter.
Hospitality: Global hotel RevPAR remained high during first half of 2024 with demand normalizing in multiple markets. Business travel and growing international demand are driving this growth; however resorts and leisure destinations have seen a decline except for European RevPAR which is expected to increase due to the upcoming Paris Olympics generating record demand for the city & surrounding areas.
Overall, JLL’s report paints a mixed picture for global commercial real estate conditions but remains optimistic about an improving outlook as economies continue to recover from challenges faced earlier this year.
