Global Vision - 2018
The world’s major economies are experiencing the first synchronous expansion since the advent of the Global Financial Crisis. But the trajectory of economic growth is moving in different directions. While the Eurozone picks up speed, the U.S. and UK are decelerating. Solid occupier demand has coincided with relatively limited new supply in most markets, increasing occupancy levels and rents and boosting cashflows.
Cap rate compression has powered much of the outsized real estate return performance of recent years, and property’s income-generating capabilities still look attractive relative to fixed income alternatives. But the situation is now starting to reverse. Interest rates are beginning to rise in many countries, most notably in the U.S. Although low inflationary expectations will keep rates moderate by historic standards, they are trending up over the five-year forecast period, putting upward pressure on cap rates.
An environment of decelerating rent growth and higher yields will put downward pressure on overall returns; over the next five years they will be lower than in recent history. But in a world of moderating return expectations across most major asset classes, property will remain a compelling alternative for many investors, especially those looking for income to match their liabilities. In Global Vision 2018, we explore geographies and product concepts that will outperform averages, driven not just by cyclical conditions, but also by powerful structural demographic and technological dynamics.
Global Vision 2018 hits the highlights of CBRE Global Investors’ current outlook for the Eurozone, Asia Pacific and the U.S. for both private and listed real assets, identifies risks on the horizon while also delineating opportunities for investors.
Global Vision is made available exclusively to current and prospective investor clients of CBRE Global Investors. Current and prospective investor clients who would like a copy of the report may contact one of our Investor Services team members. Click here for a list of contacts.