The case for higher transaction volumes in 2025 and beyond

Global CRE transaction volumes are near decade lows, but a convergence of powerful trends is set to ignite a strong rebound. Despite some counterbalancing challenges, we anticipate robust and sustained growth in transaction volumes over the coming years.

What you will learn:

• While the rate-hiking period is behind us, markets remain cautious around terminal policy rates and term premia which could keep longer-dated bond yields higher for longer. Despite this, we believe the path is towards improving investment activity next year.
• The “denominator effect” has reversed as global equity markets surged 57% since Q4 2022, possibly leaving many institutional investors underweight in real estate allocations and creating opportunity for increased capital flows into the sector.
• Private closed-ended funds are holding more than $300 billion of assets in extension periods, with pent-up selling pressure expected to drive significant disposals and trading volumes.
• Although distress levels may negatively impact sentiment, we believe distress sales volumes will increase as liquidity improves and there is an orderly path towards deleveraging of the sector.
• Appraisal-based valuations are starting to catch up with transactional trends. If this gap were to close entirely, it would support more trading activity, open-ended funds redemption queues would decline, and listed real estate investment trusts will become net buyers again.