According to Savills Global, a more positive real estate investment environment is expected in 2024, with activity expected to increase in the third quarter, driven by the recovery of markets such as the US or the UK. In sectoral terms, overall there is greater optimism about activity in the residential markets, and particularly in the multifamily segment, where demand is outstripping supply in many regions, and in the logistics sector, driven by its strong fundamentals.
These are the conclusions of the latest investment barometer carried out by the consultancy at global level, in which more than half (57%) of those surveyed anticipate a moderate to strong increase in investment activity in the coming year, with this percentage rising to 70% for multifamily residential assets and 66% for industrial and logistics assets. The overwhelming majority (90%) of participants predict increases in rents in the multifamily segment and 91% expect increases in the residential market in general. In the logistics market, 92% of respondents expect rents to rise or stabilize, in a context of resilient consumer demand and an expanding production base after Covid-19.
With regard to the office and retail markets, the majority of Savills experts anticipate a stabilization or growth in rents in the prime markets, with 71% pointing to a rise in values in the case of offices and 81% in the case of retail. However, when it comes to assets in the secondary office market, the trend is different, with 70% predicting that rents will remain stable or fall in the coming year, with any possible increase depending on the updating/modernization of the assets.
Savills experts also anticipate what will be the main investment trends for different investor profiles. In the case of players with core and core plus strategies, there will be a preference for Prime CBD offices aligned with the current needs of occupiers, for prime logistics assets in most markets, for prime retail and prime hotels in tourist destinations, with special emphasis on France, Spain, Portugal, Australia and Singapore. Prime living assets in places like Singapore, Japan, Spain, Germany, the United Kingdom and Italy, i.e. with strong urbanization trends and growing rental demand, will also be on the rise. Investors with value-add strategies are eyeing opportunities to refit and reposition offices in prime locations, especially in the Netherlands, Spain, Japan and the United Kingdom; as well as for the repositioning and modernization of stores in prime axes in southern European markets and Asia. In the case of investors with a more opportunistic profile, special attention will be paid to offices with potential for conversion and to the management of underperforming assets, such as older shopping centers.
"We will certainly continue to see greater diversification of portfolios, as a strategy adopted by investors, directing their investment towards alternative segments such as residential, senior living, healthcare and student housing. In addition, ESG criteria and decarbonization will also feature prominently since, as investors become more aware of environmental, social and governance aspects, they will look for assets that offer a high financial return and are aligned with their values", comments Alexandra Portugal Gomes, Head of Research, Savills Portugal.
