Leaders of several of the biggest brokerage firms around the globe are calling the bottom of the market as interest rates start to decline and debt becomes easier to secure.
Speaking off the back of a 5% increase in half-year revenue to more than $2.1bn (£1.6bn), chairman and chief executive of Colliers International Jay Hennick said: “With lower interest rates, greater availability of debt, and the narrowing of bid-ask spreads, we anticipate that deal activity and therefore sales volumes for Colliers should begin to recover from here,” adding that capital markets business for the firm had seen “modest growth” for the first time in 24 months.
Chris McLernon, chief executive of real estate services at Colliers, added that following interest rate reductions by Canada, the ECB and now the UK, there was increased confidence that the Fed would cut rates by the autumn.
He said that as a result of that confidence the business was seeing a “huge increase” in activity.
“Our pipeline is growing,” he said, “but we don’t expect normalised market probably until into 2025. We think it’s going to be more of a gradual approach to increasing the market activity.”
McLernon added that deal size was also growing.
“The last 18 months have been incredibly slow on the investment volume, and it has been smaller tickets of $25m to $100m. Now we are starting to see a few larger $100m-plus transactions in the different regions,” he said. “This will start to set the transparency of pricing and probably spur more transaction activity.”
Barry Gosin, chief executive at Newmark, which last week reported a 14.5% increase in revenue from its capital markets division in the three months ended 30 June and a 6.6% increase in total revenue to $1.2bn in the first six months of the year, said the sector had now passed the inflection point.
“We hit the trough,” he said. “We are on our way to better times. Interest rates have stabilised. The ecosystem is designed to buy property. The whole industry that is there to invest dry powder are starting to feel better about the opportunities.”
Gosin and Hennick’s remarks echo that of CBRE boss Bob Sulentic, who last month said the business was on the “cusp of an inflection point” as real estate markets continue to recover.
Speaking as the firm reported an 8.7% increase in Q2 revenue to $8.4bn, with a “much less pronounced” than expected decline in property sales revenue, Sulentic said the firm’s investment sales brokers and mortgage brokers were “more active and have stronger pipelines than they did before”.
“In our work with office tenants, where we measure through all kinds of different mechanisms and surveys, sentiment has gotten better,” he said. “So we have this anecdotal evidence from the second quarter and then third quarter, and then we have more technical evidence that causes us to think that we may well have gone through an inflection point on transactions that’s going to impact leasing, that’s going to impact sales, that’s going to impact mortgage brokerage, and it’s going to have a really nice impact in the fourth quarter on the profitability of our development business.”
The last of the major global agents report their Q2 and first half results this week, with JLL delivering its update on Tuesday as the US markets open, and Savills delivering a London Stock Market update on Thursday morning.
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