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The year 2023 was an especially tough one for real estate. Declines in asset valuations, which had begun in the second half of 2022 in many markets, proliferated across a broader range of markets through the rest of 2023. Transaction volume also continued to fall through the year, with dealmaking often paralyzed by the standoff between potential buyers and sellers on pricing.

Investors will be hoping for a better 2024, where we find a floor in pricing that will return the market to more-normal levels of activity. When and how that happens remain to be seen. It may be through increased distress forcing sellers onto the market. Or we might eventually see interest rates start to fall, returning confidence to potential buyers. Whatever the details of exactly when and how we reach that point, the sudden market movements we’ve seen over the last 12 to 18 months have shifted the playing field. Investors are reassessing their real-estate allocations and strategies to mitigate significant risks but also exploit opportunities posed by this market dislocation.

Globally, inflation appears to be stabilising, and interest rates have possibly reached their peak, suggesting a potential soft landing for the global economy. However, several risks persist, including geopolitical tensions, economic downturns due to tighter credit conditions, and the possibility of a resurgence in inflation triggered by unexpected spikes in oil prices.

Our latest paper explores the impact on the Singapore office, industrial, retail, private residential, hotels, and investment markets.

As experts in commercial real estate, our work is built on successfully identifying and navigating opportunities for our clients. In our fourth annual Global Investor Outlook report, we provide a comprehensive, in-depth look at the trends set to dominate the investment market and where we think opportunities can be found in the year ahead. We have synthesised views from our senior Capital Markets experts and investors around the world.

In 2024, challenging conditions will persist, but a clearer rate outlook and tightening bid-ask spreads appear to be on the horizon. As investors continue to seek stability in policy environments, the industrial & logistics (I&L), multifamily and office sectors largely remain their top picks in the upcoming year. As momentum builds, the best-positioned investors will be those who are ready to act on opportunity.

Global Key Themes

• Real estate assets retain appeal despite ‘higher for longer’ interest rates. Pricing will continue to adjust to a more realistic equilibrium, and we expect transactions to pick up in H2 2024.
• Pockets of opportunity are continuing to emerge under tighter conditions. Property funds are facing redemption pressures, and a higher cost of capital is seeing more owner occupiers unlock capital via sale and leaseback transactions.
• A calmer rate environment is coaxing out capital. We anticipate investors will begin to deploy capital that is primarily opportunistic or value-add led on a selective basis.
• Investors continuing to flock to I&L assets due to their perceived stability and growth potential. Investors are migrating to related sub-sectors such as cold/dark storage.
• Number of alliances are growing as investors look at different opportunities to pool resources and mobilise funds. The complexity of accessing some specialised assets such as student housing and data centres will drive more partnerships and joint ventures between investors and developers.
• Growing acceptance of ESG as a key element of investment decision-making. A record proportion (25%) of investors surveyed have ESG-based disposal and acquisition strategies in place, particularly in EMEA and APAC – up from 10% just two years ago. We expect a wave of disposals and value-add opportunities to enter the market.