PWC's Emerging Trends in Real Estate: 2024 Global Outlook
A summary of 2024 Emerging Trends in Real Estate
Real Estate Market Rebound in 2024: While risks are still high, there’s an expectation of improved liquidity in real estate markets. Investors are cautiously optimistic due to greater clarity in monetary policies across key regions.
Higher-Interest Rate Environment: Acceptance of sustained higher interest rates may help align buyer-seller expectations, fostering more deal activity. A significant recovery, however, is expected more in 2025 than 2024.
Geopolitical and Economic Uncertainty: Key concerns include geopolitical conflicts (e.g., Ukraine, Gaza), economic volatility, and the need for refinancing substantial debt. This environment adds caution to investment approaches globally.
“Three Ds” Shaping Investment: Demographics, digitalization, and decarbonization are redefining investment focus, particularly favoring sectors like logistics, data centers, and various forms of housing (e.g., affordable, student, senior living).
ESG Priorities and Challenges: Environmental, Social, and Governance (ESG) commitments are increasingly integrated into real estate strategy, despite challenging market conditions potentially slowing progress.
Shift to Alternative Real Estate Sectors: Rising interest in “beds, sheds, and meds” (housing, logistics, life sciences) is observed, with traditional office and retail spaces losing traction compared to more adaptable and sustainable options.
Rescue Capital and Refinancing Needs: A vast wave of commercial debt, particularly in the US, requires refinancing, driving a need for “rescue capital” and potentially opening investment opportunities in distressed assets.
Regional Variances in Market Resilience: Asia Pacific, especially Japan and South Korea, shows relative stability and demand resilience. In contrast, Europe and North America face slower recovery due to economic headwinds and the impact of hybrid work on office demand.
Rethinking Building Use and Occupier Relations: Occupiers’ evolving needs, including hybrid work and sustainability, are shifting real estate from static asset management to flexible, service-oriented spaces.
Emphasis on Technology and Sustainability Integration: Innovations like edge data centers, energy-efficient logistics hubs, and electric vehicle infrastructure underscore the integration of sustainable practices and technology in real estate development.
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Reflective Question: How can real estate companies better align with occupiers’ ESG goals while adapting to the high-interest rate environment?