【城市土地学会ULI】2025年全球房地产新兴趋势展望报告

2025

GlobalOutlook

UbanLandtiiuie

pWC

CONTENTS

CHAPTER1

WELCOME

EXECUTIVESUMMARY

FACINGUP

TOREALITY

CHAPTER2

NEW

HORIZONS

ABOUT

THEREPORT

EXECUTIVESUMMARY

EXECUTIVESUMMARY

“Weexpectoveralltransactionvolumesto increasesubstantiallythisyear.Hospitality,retail,officesareabigpartofthisrecovery.”

USinvestmentbanker

LONDON,UNITEDKINGDOM

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EXECUTIVESUMMARY

Inflationandhigher-for-longerinterestratesinsomeregionscontinuetocastalongshadowoverglobalrealestateastheindustryweighsuptheopportunitiesandrisksoverwhatpromisestobeachallengingyearahead.

Theoverarchingconcernis

politicalrisk.

Politicalpolicy-makingandgeopoliticalinstabilityareamonginflation’schiefdrivers,and

theyareuppermostinthemindsoftheindustryleadersinterviewedforthisGlobaleditionofEmergingTrendsinRealEstate®.

ThebackdroptothelatestinterviewsincludedmartiallawbeingdeclaredinSouthKoreainthefinalweeksof2024,theslewofexecutiveordersintheearlydaysofthenewUSadministrationandpoliticaltensionscreatedinthebuild-uptotheelectioninGermanyinFebruary.TheseinterviewsreinforcethecautioussentimentevidentinallthreeregionaleditionsofEmergingTrends.Thisisanindustryquestioninghowpoliticaldecisionswillinfluencemonetarypolicy,economicgrowthand,aboveall,thewarsinUkraine

andGaza.Asoneglobalplayersays:“Theoverarchingconcernispoliticalrisk.”

Ifanything,thegeopoliticalriskisgreaternowthanatthestartoftheyear,anditiskeenly

feltintheindustry’schallengesaroundclimatechangeandtheenvironmental,socialand

governance(ESG)agenda.DespitethewildfiresthattorethroughLosAngelesinJanuary

andthedestructiveflashfloodsinValencialastOctobertherehasbeenabacklashagainstESGregulationsintheUnitedStates,andareorderingofcapexprioritiesinotherpartsof

theworld.ESGisnow“apoliticallychargedacronym”.Butrealestateleaderswanttosee

theindustrygetbacktobasics:focusonthefinancialupsideofpayingattentiontomattersofenergyandtheenvironment,anddemonstrateareturnoninvestment.

Despitetheprevailinguncertainties,theregionalreportssuggestthatdealmaking

prospectsareimprovinginallmarkets,albeitslowly.ThenewinterviewsandthelatestinvestmentdatafromMSCIconfirmthepositivetrendbutwiththecaveatthatinflationmayyetdelayfurtherrecovery,particularlyintheUS.Intervieweesalsounderlinetheongoingvalueofdiversification.AsiaPacificisseenasparticularlypromisingfor

structuralreasons,providinginvestorswithdifferententrypoints.

Interesthasresumedinsectorsthathaverepricedsufficientlytoofferapromisingrisk-rewardoutcome,suchasretailandsomevalue-addoffices,butthisremainsamarket-by-marketjudgementcall.

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EXECUTIVESUMMARY

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Europe

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Socialand

politicalissues

Economicand

EXECUTIVESUMMARY

Realestatebusinessissues

financialconcerns

ConstuctionCosts

Interestrates

Geopoliticaltensions

Theproblemeverywhereisthatconstructioncosts,andtheabilitytosecurecontractorsisanightmare.

AsiaPacificfundmanager

Geopoliticshasbeenaconcernforthelastdecadeandisheretostay.It’sakindofnewconstant.

Europeanrealestateheadataninstitutionalinvestor

Weareinanewinterestrateregime.Theneutralrateofinterestishighernowthanit’sbeeninthelastcouple

ofdecades.

US-basedheadatadataanalyticsfirm

Regulations

Housingavailabilityandaffordability

ThehousingcrisesacrossEuropewillsoonneedtobe

rebrandedashousingemergencies,becauseasitstandsthecurrentlevelsofdeliverycannotsustaintheneeds

oftomorrow.

Anotherchallengearoundkeepingupwithchanging

regulationsisthatwhateveryoudecidetospendontoday,maybeinsufficientforthefuture.

Thelastcoupleofyearswouldsuggestthatinterestratesaremuchmorefundamentaltotherealestateindustryandvaluecreation.We’dallliketothinkweworksohardandtrytoaddvalue,butitbasicallyboilsdowntowhereareinterestrates.

Europe-basedglobalinvestmentmanager

Europeaninstitutionalplayer

Economicgrowth

Europeanrealestateexecutive

Changingoccupierdemand/vacancyrates

Thefuturetrajectoryoftheeconomylooksastenuousanduncertainasever.

It'snecessarytobeinagoodlocationwithmodernfacilities

becausethosearetheassetsthatoutperform.Alltheaverage,grade-Bstock,theycan’tridethewaveanymore.

AsiaPacificregionalanalyst

Thehousingstockshouldbeturningovermorethanitdoeshere.Wedon’tproduceenoughofit.Wedon’thaveplacesforpeopletoagedowninto.

US-baseddeveloper

US-basedindustryconsultant

Demographictrends

Environmentalrequirements

BothinEuropeandtosomeextenttheUS,growthcontinuestobethesinglemostimportantfactorthatisgoingtodrive

We’retryingtofocusgeographicallyoncitiesthatare

showingstrongpopulationgrowth,strongjobgrowthandbusinessformation,andsothatisgoingtoleadustothemajorSunBeltcities.

theoccupationalmarkets.

Europeanseniorexecutive

It’sdifficulttoincorporateadditional[ESG]costswith

limitsonmarketpricing,andmarginsarealreadyslimwithhighinterestratesandcostescalation.

US-basedindustryprofessional

Investmentactivity

Americanindustryprofessional

Politicalinstabilityandextremism

Caprates

Valuationsarenotreflectingthemarketprice,asthereisnobenchmarkingduetolackofdeals.

Chiefinvestmentofficerofapan-Europeanrealestatefirm

Capratesaren’tnecessarilygoingbacktothosehistoriclowsbecausegrowthratesaren’tthere.

Americaninvestmentbanker

Pan-Europeanmanager

Thebigpictureisoneofuncertaintywithchangesinpoliticaltone.ThereareworryingtrendsnotseensincetheSecondWorldWar[compoundedby]migrationandthegapbetweenthehavesandthehaves-not.

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EXECUTIVESUMMARY

SECTORSTOWATCH

LOGISTICS/INDUSTRIAL

STUDENTHOUSING

PRIVATERENTEDRESIDENTIAL

DATA

CENTRES

SENIORHOUSING/ASSISTEDLIVING

HOTELS

SELF-STORAGEFACILITIES

NEWENERGY

INFRASTRUCTURE

HEALTHCAREFACILITIES

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RETAIL

FACINGUPTOREALITY

CHAPTER1

FACINGUPTOREALITY

“Wearemostconcernedaboutbaserates

stayinghigherforlonger.Wemayhavetogetusedtothis.Butthere’sstillgoodnewsoutthereforrealestate.”

CEO,realestateinvestmentbank

HOUSTON,UNITEDSTATES

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FACINGUPTOREALITY

Theglobalrealestateindustryisfacinguptotherealityoflingeringinflationandhigher-for-longerinterestratesinsomeregions,asitcontemplatesacomplex

yearahead.

Thisinflationmaydelaythehoped-forrecoveryincapitalmarketsandoccupiermetrics,particularlyinNorthAmerica,althoughEuropeislargelyseentobeontherighttrajectory,andsomeAsianmarketsareevenonadivergent,deflationarypath.

Politicaldecisionsandgeopoliticalinstabilityare

amonginflation’smaindrivers,accordingtoreal

estateleaderscanvassedforthisthisGlobal

editionofEmergingTrendsinRealEstate®.“The

overarchingconcernispoliticalrisk,”saystheCIOofaglobalpensionfund.“TheUSadministration'srapidissuingofexecutiveordersdoesn’thelp

investors,whopreferastableenvironment.”Ordersincludingtariffs,animmigrationcrackdown,and

PresidentTrump’seffortsasapeacemakerinthe

MiddleEastandUkrainecouldpotentiallyaffectthedelicategeopoliticalbalance.“Arangeoftensionsmeanthatinflationriskisnowhigherthanitwassixmonthsago,”addsarealestateinvestmenthead.

However,anotherindustryleadersuggeststhat“theinflationarytrendbeganbeforetheelectionand

largelyreflectsthehealthoftheUSeconomy”.TheUSFederalReserve,meanwhile,identifiessystemicandpoliticallydriveninflationinitsJanuarymeetingminutes,sayingthatdueto“recenthigher-than-

expectedreadingsoninflation,andtheeffectsofpotentialchangesintradeandimmigrationpolicy,

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Figure1-1Globalrealestatecapitalflows2007-2024

$bn

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Theoverarchingconcernis

politicalrisk.PresidentTrump’srapidissuingofexecutiveordersdoesn’thelpinvestors,who

preferastableenvironment.

[ratecutting]couldtakelongerthanpreviously

anticipated”.TheFedheldratessteadyatits

January29meeting,afterthreeconsecutive

reductionstowardstheendof2024broughtratesdownbyafullpercentagepoint.

0

200720082009201020112012201320142015201620172018201920202021202220232024

Nevertheless,Europe’sslower-growthmodecouldwellbeafoilforglobal,systemicinflation,giving

EMEA

Americas

AsiaPacific

VolumeYOYChange

%

75

50

25

0

-25

-50

-75

theEuropeanCentralBank(ECB)andtheBankofEngland(BoE)sufficientreasonstocontinuecuttingrates.AttheendofJanuary,theECBinstigateditsfifthratecutsince2023,withtheBoEfollowingsuitinFebruary,althoughsentimenthascooledontheBoEmakingmultiplecutsthisyear.

Generaloptimismaboutthedirectionoftravelis

furtherboostedbyasensethatvaluationshave

reachedarealisticlevelinEurope,withdealmakingconsequentlystartingtoimprove.“We’renot

201020112012201320142015

201720182019

MSCI.

expectingpeakvolumesthisyear,buttheyshouldcontinuetopickup,quarter-on-quarter,”saysa

200720082009201620202021202220232024

Source:

Chartsexcludedevelopmentsites.

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Europeanrealestateinvestmenthead.

FACINGUPTOREALITY

Similarly,US-basedinvestorsseehigherinterest

ratesandinflationslowingtheresumptionofdeals,orcontributingtoa“corrugated”recovery.“Our

houseviewisthatthereisgoingtobeupward

Investorsstillseegreater

valueintheUSandEurope

comparedtoAPACbecausevalueshavefallenfasterthere.

InAsiaPacific,marketsmaytakemoretime

toresume,withoneAPAC-focusedinvestor

callingtheenvironment“stillrathersluggish”but

highlighting“significantopportunitiesconnectedtodemographics”.

AccordingtotheregionalEmergingTrendsreports,whichcanvassedviewsacrossEurope,North

AmericaandAsiaPacificinthethirdquarterof

2024,businessconfidenceisupinallthreeregions,despitearangeofchallengesahead.ForEurope,

politicalinstabilityisseenasthechiefissue

cloudingthehorizon;inNorthAmerica,interest

ratesandcostofcapitalrankhighest,whileAsianrespondentspointtolowyieldsandinterestratechallenges.

TheinterviewsforEmergingTrendsGlobal,

conductedthisyear,reaffirmconfidenceinEurope,despitegeopoliticalclouds,whileintervieweesin

AsiaPacificexpressdoubtsthatcapitalmarketswillrecoverquickly.“InvestorsstillseegreatervalueintheUSandEuropecomparedtoAPACbecause

valueshavefallenfasterthere,”notesoneassetmanager.

pressureoninflationintheUSbecausethenew

environmentweareinisgoingtoinvolveabitmoreprotectionism,”saysoneglobalCIO.AEuropean

investorseesthefinancingclimatecontinuingtoimprove:“Sentimentisalotbetterthanitwas12monthsago,withinterestratereductionsmakingcheaperleverageacommodityagainforyieldingassetclasses,whichisgreatnews.”

Viewsonthekeyeconomicandfinancialissues

alsovaryacrosstheregions.InEurope,economicandglobaleconomicgrowtharethemainconcernsfollowedbyinterestratemovements.Thegrowth

outlookisstilltopofmindforEuropealthough

sentimentisgenerallypositive.AEuropeanreal

estateheadsaysthat“Europeisheadingfor

growthoverthenexttwoyears,nowthatinterest

ratesarecomingbacktoalowlevel”.However,

anotherEurope-basedinvestmentheadwondersif“occupiermarketswilltakesometimetothrive”dueto“uncertainaspects”inthegrowthoutlook.

Interestratesandthecostofcapitalremainthe

mainconcernsfortheyearaheadinAmericaandAsiaPacific.“Interestrateswon’tnowfallasfast

aswehopedtowardstheendoflastyear,notleastduetothestrengthoftheUSeconomyandthe

risesin10-yearbondyields,”saysaninvestmentbankingchief.

SINGAPORE

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FACINGUPTOREALITY

Yetinteresthasalsoresumedinassetsthathaverepricedsufficientlytoofferapromisingrisk-

rewardoutcome,suchasretailandsomevalue-addoffices.

Themoreoptimisticintervieweessharetheviewthattheindustryisclosetotheresolutionofa

three-year-longpathwaytorecovery.InEmergingTrendsGlobal2023,oneleaderhopedthat

“investmentactivitywillstartincreasing,possiblybythesummer[of2023],ifthereisa‘declarationofvictoryoninflation’”.In2024’sGlobalreport,leaderssaw2024as“apivotpoint,moving

towardsgreaterliquidityinrealestatemarkets”.Theviewnowisthat2025shouldmarkthenextstageofbreakthrough,perceivedbysomeasa“resetpoint”oreven“thestartofanewcycle”.

Yetpocketsofcautionremain.Eventheglobal

euphorialastSeptemberabouttheFedstartingtocutrates–flaggedinallthreeregionalreportsasaturningpoint–hasreceded.

Despitethis,theoutlookforrealestatedebt

islargelyseenaspositive.“There’salotof

capitaloutthereandthebanksaresubstantiallyback–theyseethereisanew,lessrestrictive,regulatoryregime,”saystheCEOofaglobal

investmentbank.

ThepictureisslightlymorecomplexinAsia,

largelybecauseoftheimpactoftheBankof

Japan’sdivergentmonetarypolicy.InJanuary,

theinstitutionraisedinterestratestoa17-year

There’salotofcapitalout

thereandthebanksare

substantiallyback一theyseethereisanew,lessrestrictive,regulatoryregime.

highascoreinflationhita16-monthpeak,whileleavingthedooropenforfurtherhikesthisyear.TheReserveBankofAustralia,whichisclosertoWesterncentralbanksinmarketsentiment,cutratesatitsFebruary18meetingby0.25percentbutwarnedthat“wecannotdeclarevictoryon

inflationyet”.“Themarketdifferencesinthe

regionremainsignificant,”saysaninvestmentheadbasedinAPAC.“WhileJapanisbecomingmoreinflationary,thereisdebateaboutwhetherdeflationwillhitChina.”

WiththeFedholdingratesfirminJanuaryand

furthercutsthisyearnowseenasunlikely,the

industrymustlooktootherroutesforresuminggrowth.“TherewillbenomajorchangeforratesintheUSthisyear,”saysaninvestmentbankinghead.“Whereweareiswherewewillbe.Butasenseofstabilitycanalsohelpbuildconfidence.”

Theglobaldealmakingthatistakingplaceis

focusedonassetsthatarepullingawayfrom

thepackintermsoffundamentals,andinsomecases,displayingcapratecompression.Investorsareincreasinglydrawntothoseassets,which

oneintervieweesays,"lieattheintersection

ofrealestateandinfrastructure",citingdata

centres,logisticssub-sectors,andarangeof

livingsegmentsasexperiencingtailwinds.Takingonassetswithadimensionofoperationalrisk

isseenas“theonlywaytodrivealphainthis

environment”,addsanotherCIO.ThesethemesarefurtherexploredinChapter2.

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FACINGUPTOREALITY

Geopoliticsandgrandstanding

Politicsandgeopoliticsarelikelyto

continueshapingtheglobalinvestmentenvironmentthisyear,withfinancial

marketsandeveninvestmentdecisionspotentiallyswayedbypublicpolicy.

“Myviewsontherealestateoutlookchange

weekbyweek,”saysthepresidentofaglobal

investmentfirm.“ThenewUSadministrationis

drivingalotofuncertainty.Questionis,howwill

capitalmarketsandflowsrespondtosomeofthatuncertaintyin2025?”

Thelastfewmonthshavewitnessedsignificantpoliticaltremors.InAsia,investorsfocusedon

SouthKorea’srisingstarwereshockedwhen

PresidentYoonSukYeoldeclaredmartiallaw,

actingasareminderthat,asoneinterviewee

notes,"it'sayoungmarket"andstillsubjectto

elevatedrisk.InEurope,economicconcernsandthegrowingpopulistmovementledtoGermany'selectionandpressureonFrance'sgovernment,leavingquestionsoverpoliticalstabilityinboth

nations,aswellasacrosstheEuropeanbloc.

TheUKbudget,thefirstfromchancellorRachelReeves,attractedthefullspectrumofcritiques.TheInternationalMonetaryFundsawsensiblemovestoshoreupthecountry’sbudgetdeficit,andsaiditexpectedthecountry’seconomytogrowby1.6percentin2025,upfromanearlierforecastof1.5percent.

12

ThenewUSadministrationis

drivingalotofuncertainty.

Questionis,howwillcapital

marketsandflowsrespondto

someofthatuncertaintyin2025?

However,businessleadersdecriedplanstohikenationalinsurancecontributionsforemployersandothermarketwatcherswarnedthatgrowthinthemediumtermwouldremainsluggish.Thegovernment'sborrowingcriteria,meanwhile,

remainindoubtfollowingtheUKgiltssell-offinJanuary.

IntheUS,PresidentTrump’svictorysplitthe

critics,withsomehopingitwouldmeanfewer

regulationsandotherscheckingthesmallprint.“Tariffsmeaninflation,reducedimmigration

meansinflation,”saysonerealestateinvestmentchiefinterviewedforthisreport.

ThemarketreactiontothenewUSadministration’sslewofexecutiveordershasbeenerratic.SomehavewelcomedclaimsthatPresidentTrumpcouldloosencertainchecksonbusinessprofitsand

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makemergerscheaperandeasier.

FACINGUPTOREALITY

ButcommoditytariffsandplanstoclampdownonimmigrationandexittheParisAgreementpromptmixedresponses.“Whiletheelectionswerepositiveinrelationtooveralleconomic

activity,thereisasensethatanumberofpoliciesareinflationary,”saysonebanker.

DuringJanuarysWorldEconomicForumin

Davos,WEFCEOBørgeBrendedescribed

the“political,geopolitical,andmacroeconomiclandscape”as“shiftingunderourfeet”.He

added:“Atthisverymomenttheclockis

quicklytickingdowntomeetcriticalpolitical

priorities:drivingeconomicgrowth,reducing

carbonemissions,findingwaystoendconflict.”DelegatesattheForumalsoheardthataroundhalfofGenerationZdoesnotbelievein

democraticinstitutionsandthat40percentnowsupporthostileactivismtoachievechange.

Meanwhile,FebruarysMunichSecurity

Conference2025examinedhowgrowing

politicaldivergencecouldstandinthewayofjointapproachestoglobalcrises.IntervieweesforthisreportexpressconcernthattheUSand

Europeappeartobeondifferentpathsoverkeyissues,includingdefenceandtrade.

Thisclimateofuncertaintydoesnothave

apredictableexpirydateinanincreasingly

conflictedworld.Indeed,theglobaleconomic

policyuncertainty(GEPU)indexwhichtrackstheimpactofseismiceventsbyscanning

keywordsinnewsmediajumpedtoapost-

pandemichighinJanuaryonthebackofTrumpsexecutiveorders.

Atthisverymomenttheclockisquicklytickingdownto

meetcriticalpoliticalpriorities:

drivingeconomicgrowth,

reducingcarbonemissions,findingwaystoendconflict.

Figure1-2GlobalEconomicPolicyUncertaintyIndex

400

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0

Covid-19

pandemicbegins

Trumpwinselection2024

Globalfinancialcrisis

Trump'sfirsttermbegin

19982000200220042006200820102012201420162018202020222024

Source:Baker,ScottR.,Bloom,NickandDavis,StephenJ.,GlobalEconomicPolicyUncertaintyIndex:CurrentPriceAdjustedGDP

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Note:TheGEPUIndexisaGDP-weightedaverageofnationalEPUindicesfor16countriesthataccountfortwo-thirdsofglobaloutput.EachnationalEPUindexreflectstherelativefrequencyofown-countrynewspaperarticlesthatcontainatriooftermspertainingtotheeconomy,uncertaintyandpolicy-relatedmatters.EachnationalEPUIndexisrenormalised

toameanof100from1997to2015beforecalculatingtheGEPUIndex.

FACINGUPTOREALITY

Dealornodeal?

Theregionalreportssuggestthat

dealmakingprospectsareturningacornerinallmarkets,andthelatestinvestmentdatafromMSCIconfirmsthepositivetrend.

AsoneEuropeanrealestateleaderinterviewedforthisGlobaleditionnotes,“investmentvolumesforlastyearturnedouttobenotbadatall”.

Whilegreaterclarityonpricingissupporting

transactions,therecontinuestobeanabsenceofrealdistress,accordingtointerviewees.“Theremaybesomeopportunitiesemergingfrom

distressanddislocation,butithasn’tbeenreallypresentinthiscycle,”notesaregionalinvestmenthead.“Peopleexpectedit,butbankshave

‘extendedandpretended’sotherehaven’tbeenmanyforcedsales.”

Europeancommercialrealestateiscomingoffthebackofitsbusiestfourthquarterfortwoyearswithsalestotalling€55.6billion,accordingtoMSCI.

Thistooktotaltransactionvolumesfor2024to€188.8billion,13.7percenthigherthanin2023.

Realestatevolumesalsoreboundedby11.3

percentinNorthAmerica,saysMSCI,followingayearofsignificantcontraction,withUSdealsjumpingbyaroundathirdyear-on-yearinthe

fourthquarter,boostedbySeptember’sratecut.

However,stickyinflationmightnowdelayfurtherrecoveryinNorthAmerica,warnsoneinvestmentbanker.

14

Investmentvolumesforlastyearturnedouttobenot

badatall.

“Therewillbeincreasedvolumewithoutquestion,butitmightnothappeninthefirsthalfof2025

anymore.”

InAsia,volumesalsoreboundedbydouble

figures,improving13.4percenton2023.However,amajordatacentredealinthefourthquarter

–thesaleofAirTrunkfor$16billion–slightlyskewedtheresults.Withoutthis,volumesweresimilarto2023.

“Volumeshavebeenratherlow,andIdon’texpectthemtopickuprapidly.However,thenextfew

yearscouldbecomeverygoodvintageyearsasaconsequence,”saysanAPAC-focusedheadofinvestment.AnotherseesJapan“astheexceptiontothisrule,attractingplentyofinvestorinterest”.

Yetthereismoreconsensusacrossallthree

regionsaboutthetrendsshapingtheinvestible

universeandthesectorsthatarelikelytobetopofinvestorwishlists.Thetrendtowardsdatacentres

–highlightedinallthreeregionalreportsasthe

mostpromisingsector–offershugeopportunitiesandnewrisksfortheindustry,whichareanalysedinChapter2.

MADRID,SPAIN

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FACINGUPTOREALITY

Anothertrendingsector,living,withits

demographic-drivensubsectorslikeseniorand

studenthousing,remainspopularforfurther

dealmaking.“Thereissomuchundersupplyin

YoucouldsaythatindividualAsianmarketsprovidetruediversification,providingtheinvestorwithdifferententrypoints.

living;fortunately,alotofthenewgovernments

thatresultedfromtheyearofrecordelections

aremoreaboutbuildingthanregulating,”saystheglobalinvestmentchiefofarealestatefirm.“Wealsothinkthatretailsrepricinghasrunitscourse

theresnotalotofcapitalchasingitandalotofretailthatisworking,”theyadd.“Wellbemoreofafastfollowerinoffices.”

differententrypoints,”notesoneAPAC-based

CIO.Inthisregion,however,“assetallocations

arenotwheretheyshouldbe,”theyadd.“[Digital]infrastructureistheonebrightspot,with

capitalstillflowingin;investorsareincreasingallocationstosomewhatnewerassetclasses.”

Capitalflowscouldbefurtherboostedbythe

resolutionofthedenominatoreffectinthelight

ofrealestaterepricing.Whilesluggishmarketsinitiallysawequitiesandfixedincomeassets

repricemorequickly,leavingsomeinvestors

over-exposedtoproperty,subsequentrealestaterepricingleftseveralfundsunder-allocated,

accordingtointerviewees.Butnow,asonerealestateinvestmentbankCEOdeclares:“Therearenoissueswiththedenominatoreffect.Alotofpensionfundsthatsubscribetoamodern

portfoliotheoryareincreasingtheirallocations,albeitmoreintothealternativespace.”

Developmentisanuancedtopicacrossallthreeregions.NorthAmericahasfacedover-supply,

suchasinmultifamilyinsomeSunbeltmarkets,althoughongoinghighconstructionandlabour

costsmeanthatthe“supplyshouldbeabsorbedthisyear,supportingrents”,accordingtoaUS-basedinvestor.InEuropeandAsia,developmentisstillathistoriclows,nothelpedbyhigh

constructionexpensesandplanningconstraints,aconcernrepeatedlyexpressedbyparticipantsduringrecentEmergingTrendsroundtable

discussionsintheNetherlands,Denmark

andtheUK.Industryleadersseefewsigns

ofimprovementoncostsanddelaystodate

eventhoughtheyareencouragedbyindividualgovernmentpledgestoboosthousebuildingandinfrastructureprogrammes.

Manyleadersalsounderlinetheongoingvalueofdiversification.Asiaisseenasparticularly

promisingforstructuralreasons.“YoucouldsaythatindividualAsianmarketsprovidetruediversification,providingtheinvestorwith

BANGKOK,THAILAND

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FACINGUPTOREALITY

Thisisfurtherhelpedbyaperceptionthatthecostofcapitalis

movingintherightdirection,particularlyinEuropeandAsia,

althoughoneinvestoralsopositivelyidentifiesa“tremendousamountofcapitalshowingup[intheUS]amidgenerationallylowcredit

spreads”.InEurope,“interestratereductionsoverthecourseoftheyear…shouldimprovethecostofleverage”,saysanotherinvestor.

Moreover,conditionsareseenasbrighterforcorecapitalaftera

difficultcoupleofyears,withonecorefundmanagernotingthat

“capitalraisingisbackasofthefirstquarterof2025”.TheGlobal

OpenEndDiversifiedCoreEquity(ODCE)FundIndexreporteda

totalreturnof1.99percentinthethirdquarterof2024,markin