Real Estate Key Themes 2025: A tentative revival for CRE growth
After a year of transition in the commercial real estate cycle in 2024, we think five key themes will support a brighter outlook for the year ahead.
The global CRE recovery has been steady yet unspectacular in 2024, in line with our expectations 12 months ago that 2024 would be a year of transition. We expect the upward trajectory to continue in 2025, though it will reflect the modest growth pace.
In this report, we delve into five key questions shaping the outlook for commercial real estate in 2025:
- What lies ahead for the global economy and interest rates, and how will these factors shape the commercial real estate landscape? On a global level, the economy is poised for moderate growth and a continuation of the rate-cutting cycle next year, but with added uncertainty from geopolitical and policy shifts. The shift to a more protectionist global economy will likely redefine trade, price stability and investment strategies.
- Will 2025 see a recovery in capital value growth, and what will drive it? Despite the policy rate-cutting cycle that is underway in many economies, long-term bond yields are not expected to return to pre-pandemic levels any time soon, which limits the potential for real estate yield compression.
- Which regions and sectors present the best opportunities for direct real estate investment? Our global relative return index indicates that the next 12 to 18 months will offer the most favourable entry point in this cycle for direct real estate investment.
- Can we expect a rebound in global CRE transaction volumes in 2025? Although global CRE transaction volumes are at near decade lows, we believe that a convergence of powerful trends is set to ignite a strong rebound.
- Will alternative and niche sectors continue to attract investors? Over the past cycle, alternative and niche sectors such as student housing, seniors housing, healthcare, and data centres have garnered global investor interest. We expect this trend to continue. However, balancing these strategies against the risks and countervailing structural forces will be critical to optimising returns in 2025 and later.
Download the full report to uncover the detailed insights and forecasts.
Sign up for our webinar: Commercial real estate key themes for 2025
CRE is poised for a tentative revival in values after several challenging years. This webinar will provide key insights into the factors driving this tentative rebound and what it means for investors and market participants in the coming year.
Register