Russia-Ukraine war adds to the risks facing global real estate
The global economic outlook has deteriorated, with downside risks threatening global real estate. In this Research Briefing, we share our baseline forecasts, as well as real estate performance under alternative scenarios.
We examine real estate performance under below scenarios:
- We’ve lowered our baseline forecast and now expect global all-property returns to average 7.4% pa over 2022-2023.
- Alternative baseline: a scenario in which the Russia-Ukraine war is protracted and results in a moderate impact to the global economy.
- Central bank overaction scenario: monetary policymakers take firm action and raise rates more rapidly than expected.
- Persistent inflation scenario: inflationary pressures prove more stubborn than anticipated in our baseline forecast
- Long-Covid scenario: the rapid spread of a new variant results in more cautious consumer behaviour and the return of Covid-related restrictions in select countries.
- End-of-pandemic scenario: fading coronavirus concerns lead to a sharp, consumer-led recovery
US bank funding turmoil drags down CRE outlook
The recent turmoil in US bank funding will likely feed into tighter lending standards to commercial property, dampening the outlook for capital values even further than we had expected. We now expect all property capital values to fall by 10% in 2023 and 5% in 2024.Find Out More
Higher discount rates mean lower returns for global CRE
Long-term forward rates have risen markedly in the US, eurozone, and UK over the past year, and now stand well above pre-pandemic (2015-2019) averages.Find Out More