June 2022 | Global Capital Markets
- Markets across the globe have started to adjust to a new regime of higher interest rates.
- Multifamily product in the U.S. has re-priced by 25 bps since the start of 2022.
- Global economy is still expected to expand, and risk of excessive leverage is limited.
- Energy efficient assets are being prioritized and are able to achieve rent premiums of up to 10%.
- Retail and hotels are re-priced and activity is rebounded across the globe.
- There continues to be a preference for residential and industrial assets.
Despite the short-term macroeconomic volatility in markets, the real estate market is showing maturity in its ability to react to new pricing norms in order to sustain investment activity. Global capital levels remain elevatde – there is $3 trillion of dry powder available for spending into real assets, according to Preqin. Much of this capital has a general outlook across all real assets, but where specified, real estate represents 35% of the total. In order for the sector to remain attractive, pricing and growth fundamentals must remain competitive relative to other real assets, even though real estate is also becoming increasingly tied to broader infrastructure, energy and debt strategies.