Investment into the world’s 16 main markets for commercial real estate is forecast to reach $747 bn (€688 bn) by the end of 2024, up 7% on 2023, says Savills.
UK turnover is predicted to reach approximately $56 bn in 2024, an increase of 20% on 2023 levels, before climbing to approximately $100 bn in 2027 – on a par with that seen in 2021 and 2022.
The international real estate advisor reports that by 2027 global investment turnover will be on course to reach approximately $1,378 bn, one of the strongest performing years in the past decade.
Rasheed Hassan, head of global cross-border Investment at Savills, said: 'The growing consensus view amongst commercial real estate investors is that the macroeconomic momentum has swung back behind deployment, given recent movements in interest rates, the broader shifts in the cost of money, and the very positive trends we are seeing in rents.
'Although not all buyers can or will move straight away, the desire and interest to be back in the market is present, so we anticipate that as more stock becomes available in 2025 turnover will rise. Long-term, real estate remains a desirable asset class, with forecast rental growth in many sectors driven by global structural, demographic and social trends.
'Right now, there is a prevalence of investors looking to participate in this growth and buy assets off of discounted pricing to generate double digit levered total returns, in many cases from relatively core assets.'
Oliver Salmon, director - global capital markets, Savills World Research, added: 'Real estate markets are bottoming out – sentiment has improved from the lows of last year, and prices are stabilising.
'Global investment also appears to have hit a nadir, with the prospect of a soft landing in global growth, and falling interest rates, likely to support a recovery in both values and volumes in the coming years.
'Our model of real estate investment – based on both economic and financial market variables – reflects this optimism, with global investment expected to return to pre-Covid-19 levels by 2026, albeit with some variations in the pace of recovery between regions.'
Richard Merryweather, joint head of UK investment at Savills, said: 'The investors we’re talking to are definitely more optimistic about deploying in the UK then they were this time last year.
'Part of this confidence comes from data, such as the MSCI total return for office, retail and industrial being positive in August for the first time in over two years, but part is due to the UK’s stability compared to some other markets where investors might have bought.
'With the market moving off the bottom we expect to see an influx of purchasers throughout the rest of 2024 and into 2025 seeking to buy before yields harden.'
