The rise of the Global CRE Market: Prospects Remain Bright
Throughout this real estate blog, we’ve been sharing insights as to why tech-enabled brokerages are going to become the future of the commercial real estate industry. Now, it seems high time to reveal more details on just how robust the global CRE market is and why it’s such an exciting venture for any tech product.
The rise of the global CRE market: the prospects remain bright
Global CRE markets have been maintaining great progress in 2017 and throughout 2018. In fact, according to JLL Global Market Perspective, Q4–2017,
“… 2017 is turning out to be a robust year for commercial real estate and, barring any major shocks, 2018 is set for more of the same. …Investor demand for real estate is unabated with full-year 2017 investment activity on pace to match last year, although volumes are likely to soften marginally in 2018 due to a shortage of product and investors exercising late-cycle caution.”
Overall, investors’ interest in CRE is on the rise. Just take a look at the latest research from prominent companies:
- real estate asset allocation across global markets reached 24% while real estate global total returns amounted to 10.7% in 2015 outperforming equities and bonds, according to MSCI Inc. and IPD Global Annual Property Index;
- real estate is now the target of institutional investment* amounting to the watershed 10.1% (or roughly $7 trillion) for the first time in 2017, according to Hodes Weill & Associates and Cornell University’s fifth annual Institutional Real Estate Allocations Monitor;
- real estate is now the fourth global class asset, according to NAIOP, the Commercial Real Estate Development Association.
How are key CRE markets performing?
A breakdown of key CRE markets performance in 2017 is a cause for optimism as well (Source: JLL, Global Market Perspective):
- office markets: up 3% globally, with a similar figure expected in 2018;
- retail markets: slowing down in the US (remains at 4,8%), strong growth in Europe and Asia Pacific;
- industrial markets: growing globally including in the US, Europe and Asia Pacific;
- hotel markets: while 2017 has seen the biggest surge of international tourism according to UNWTO, global hotel investment volumes did not keep up due to the lack of available properties and totaled in US$38.1 which is 17% down from 2016.
Top geographies
So what are the global CRE destinations that see the biggest growth? JLL provides a breakdown:
What’s next?
The global CRE market is preparing for exciting changes following growing consumer and investor demand. Powerful tech such as artificial intelligence, VR and blockchain is already here, so now is the time for brokerages to fully explore the opportunities they deliver.
