Intelligent Investment
Global Midyear Real Estate Market Outlook 2021
Discover how continued vaccine rollouts, supportive fiscal and monetary policies and improving economic activity will influence commercial real estate globally this year and next.
July 26, 2021 20 Minute
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The overall outlook for global real estate is positive as we move into the second half of 2021.
COVID-19 remains a risk, but the vaccine program in the developed world has turned the tide. The big economies are reopening and a fast-paced recovery is well underway.
We hope you find this Midyear Global Outlook useful in shaping and executing your real estate strategies in 2021 and 2022.
RICHARD BARKHAM
Global Chief Economist & Global Head of Research
Key Takeaways
Global Economy Set to Rebound
CBRE’s baseline forecast is for strong global economic performance throughout 2021 and 2022, before the growth rate reverts to long-term trend levels. Asia-Pacific (APAC) and the Americas will see peak GDP growth in 2021, while Europe and Japan will see their strongest growth in 2022.
Global Inflationary Concerns Overstated
Fears that rising inflation will force central banks to increase interest rates have the potential to cause market turbulence over the next year. However, even if inflation remains higher than expected, we expect monetary policy to remain highly supportive of economic growth into 2023.
Capital Markets Positioned for Accelerated Growth
Global real estate investment and lending activity will accelerate in H2 2021 and in 2022. Investors show greater risk appetite and are increasingly attracted to the higher returns available in certain asset classes that have been hardest hit by the pandemic.
Office Leasing & Investment Activity Begins to Pick Up
In the medium term, economic growth will support office-using employment growth, which will boost office leasing and investment demand. CBRE expects office vacancy rates to rise further this year before dropping in 2022.
Retail Contends with Increased Demand for E-Commerce
Globally, traditional retail foot traffic and sales continue to increase from the COVID-19 pandemic lows. Despite a return to normalcy, the further rise of e-commerce during the pandemic has left a lasting impact on the retail industry.
Industrial & Logistics Sector Set for Strongest Year on Record
Industrial real estate fundamentals were largely unscathed by the pandemic-led global recession and this resilience is expected to make 2021 the strongest year on record for the sector.
Multifamily Investment Grows Globally
COVID-19 did little to dampen investor appetite for multifamily globally. The sector’s sharp growth, especially outside of the U.S., is expected to continue and potentially make multifamily the leading global investment asset class in years ahead.
Hotel Sector Seeks to Improve Operational Performance
After their worst year since the Great Depression, hotel owners and operators are focused on improving operating performance and asset value. This effort is being challenged by labor constraints and supply chain disruptions, which have combined to put upward pressure on operating costs.
Alternatives Attract Increased Investor Interest
Investors are increasingly allocating capital to alternative real estate through direct investment and entity-level acquisitions. The cold storage, life sciences and data center sectors are red hot and yields are compressing significantly.
Global Economy Set to Rebound
CBRE’s baseline forecast is for strong global economic performance throughout 2021 and 2022, before the growth rate reverts to long-term trend levels. Asia-Pacific (APAC) and the Americas will see peak GDP growth in 2021, while Europe and Japan will see their strongest growth in 2022.
Global Inflationary Concerns Overstated
Fears that rising inflation will force central banks to increase interest rates have the potential to cause market turbulence over the next year. However, even if inflation remains higher than expected, we expect monetary policy to remain highly supportive of economic growth into 2023.
Capital Markets Positioned for Accelerated Growth
Global real estate investment and lending activity will accelerate in H2 2021 and in 2022. Investors show greater risk appetite and are increasingly attracted to the higher returns available in certain asset classes that have been hardest hit by the pandemic.
Office Leasing & Investment Activity Begins to Pick Up
In the medium term, economic growth will support office-using employment growth, which will boost office leasing and investment demand. CBRE expects office vacancy rates to rise further this year before dropping in 2022.
Retail Contends with Increased Demand for E-Commerce
Globally, traditional retail foot traffic and sales continue to increase from the COVID-19 pandemic lows. Despite a return to normalcy, the further rise of e-commerce during the pandemic has left a lasting impact on the retail industry.
Industrial & Logistics Sector Set for Strongest Year on Record
Industrial real estate fundamentals were largely unscathed by the pandemic-led global recession and this resilience is expected to make 2021 the strongest year on record for the sector.
Multifamily Investment Grows Globally
COVID-19 did little to dampen investor appetite for multifamily globally. The sector’s sharp growth, especially outside of the U.S., is expected to continue and potentially make multifamily the leading global investment asset class in years ahead.
Hotel Sector Seeks to Improve Operational Performance
After their worst year since the Great Depression, hotel owners and operators are focused on improving operating performance and asset value. The scarcity of labor, combined with supply chain disruptions, has resulted in the first signs of inflated operating costs.
Alternatives Attract Increased Investor Interest
Investors are increasingly allocating capital to alternative real estate through direct investment and entity-level acquisitions. The cold storage, life sciences and data center sectors are red hot and yields are compressing significantly.
Research Contributors
Ada Choi, CFA
Head of Occupier Research & Head of Data Intelligence and Management, Research, Asia Pacific
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