JLL’s recently released Global Real Estate Perspective – Highlights presents a positive outlook despite the current uncertain economic climate. The report authors note that while there is still some mixed international economic data, growth has remained resilient and forecasts have been revised upwards throughout the year.
Capital Flows
The perspective highlights 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 expected to see monetary policy easing by the end of 2024, but there is still confusion surrounding timing and geopolitical factors. Nevertheless, momentum is expected to increase with early signs of an inflection point in real estate markets.
– Pricing: Most global markets are seeing stabilization in pricing as bidder activity increases and negotiations become more realistic. According to JLL’s report, “Pricing is now stabilizing at levels observed since the start of this year,” with indications of yield compression appearing 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 remains strongest for high-demand sectors; however loan workouts and refinancing continue to be areas requiring attention.
Property Sectors
The report also examines trends within various global property sectors:
– Office: Demand recovery continues gradually within this sector as leasing volumes trended approximately 10% higher compared to last year at this time. While hybrid work policies contributed towards leasing activities increasing across North America & Europe regions; cost concerns coupled with lower availability dampened numbers across Asia Pacific region.
– Industrial/Logistics : Leasing volumes increased for EMEA & APAC industrial/logistics properties while stalling slightly within North American marketplaces . Record-high deliveries were seen globally which led vacancy rates up slightly too . Additionally , occupiers remain cautious when making decisions about new leases, according to the report.
– Retail: Despite a softening in retail spending growth, ongoing consumer demand continues to drive strength within storefronts. The report suggests that mature markets could see an increase in retail spending during 2H 2024 due to rising real disposable incomes and international tourism returning along with an expected uptick in economic activity.
– Residential: JLL’s report notes that global living investment market is strengthening; large transactions were seen across North America & Europe regions while EMEA region saw its living investments nearly double from Q1 figures . Although Asia Pacific region had lower investment volumes than other regions , it still increased compared with previous quarter .
– Hospitality : Global hotel RevPAR remained high throughout first half of 2024 but has since normalized slightly as demand returns closer towards pre-pandemic levels. Business travel and growing international demand have been key drivers for this growth; however resorts and leisure destinations have experienced significant declines. The exception is European RevPAR which the authors anticipate will increase thanks largely due Paris Olympics generating record-breaking demands for both city itself & surrounding areas.
Overall, despite mixed conditions globally, there are signs of improvement on the horizon for various property sectors as economies continue to recover from pandemic-related challenges.
