The global real estate industry is at a ‘pivot point’, with improving prospects ahead for renewed investment activity, according to the latest Emerging Trends in Real Estate Global Outlook 2024 report published by PwC and the Urban Land Institute (ULI).
With inflation reducing, interest rates potentially peaking and greater clarity on monetary policy, the report found there is a degree of optimism that the market is “gradually reconciling” with an elevated ‘higher for longer’ interest rate environment.
Thomas Veith, PwC global real estate leader, said: “With an increasingly assessable risk-return profile compared to other asset classes, and a broadening of asset classes towards real assets, the sector will see an adjusted but positive development. However, we must address the need for sustainable adjustments.”
Lisette van Doorn, CEO of ULI Europe, added: “This year’s report indicates that the market is beginning to get to grips with a new era of higher interest rates, and how this will need to impact pricing levels. Depending on the level of distress that might emerge, this may actually help the implementation of the ESG and, especially, the decarbonisation agenda, with potential buyers in a stronger negotiation position to incorporate the required capital expenditure.”
Gareth Lewis, of PwC real estate, said: “Through our conversations with market participants, we identified a strong belief that a long-term, thematic approach, particularly centred around decarbonisation, opens up a new world of potential quasi-real estate products for investors. This includes the expectation of increased investment in sectors such as new energy infrastructure, which continues to be viewed as holding the greatest overall investment and development potential, according to survey participants in Europe.”
