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The Investment Outlook For Major Property Markets - 2016

In this mid-year update of our 2016 Global Vision, we review what has and hasn’t changed over the past six months. Our global economic outlook remains largely intact – moderate expansion close to trend. Likewise, we anticipate continued steady improvement in most property markets, supporting operating income growth. But the period of yield compression is largely over. If anything, there will be upward pressure on cap rates, especially in fully recovered markets like the U.S. This will temper core real estate returns going forward.

In this update we identify ways astute real estate investors can still capture solid, even outsized, performance. One way is by identifying sectors/geographies with superior relative value.  Another is to capitalize on pricing disconnects between the public and private markets, or to participate in the infrastructure universe. Investors in direct real estate should focus on investment themes that will be resilient in the rollercoaster ride of economic and pricing cycles.  In our regional outlooks, we detail our preferred investment themes.