CRE turnover on course for 20% uplift on 2023

UK commercial real estate turnover is predicted to reach around $56bn (£43bn) in 2024, up 20% on 2023 levels, according to Savills. The agent said it expected UK turnover to climb to $100bn (£78bn) in 2027, on a par with that seen in 2021 and 2022. Investment into the world’s 16 main markets for commercial real estate is forecast to reach $747bn (£573bn) by the end of 2024, 7% up on 2023. Together, Canada, the US, France, Germany, Italy, Netherlands, Spain, Sweden, UK, Australia, China, Hong Kong, India, Japan, Singapore, and South Korea account for approximately 90% of global commercial real estate investment. Savills said global investment turnover is on course to reach $1,378bn (£1,058bn) by 2027, one of the strongest performances of the decade. Richard Merryweather, joint head of UK investment at Savills, said the confidence in UK investment comes from data, such as the MSCI total return for office, retail and industrial, being positive in August for the first time in more than two years, which is “in part is due to the UK’s stability compared to some other markets where investors might have bought”. He added that Savills expected an influx of purchasers throughout the rest of 2024 and into 2025 seeking to buy before yields harden. Rasheed Hassan, head of global cross-border Investment at Savills, said: “The growing consensus view among 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 of global capital markets at Savills World Research, said: “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.”   Image by Pete Linforth/Pixabay