Hines: 2025 a ‘pivotal moment’ for global real estate markets

Next year has the potential to be a pivotal turning point for global real estate markets, according to Hines’ 2025 Global Investment Report, which has just been published. The market will transition into a new cycle of growth and recovery, with many potential opportunities unfolding in private markets, according to the report.

David Steinbach, Global CIO, Hines

“As we enter 2025, we remain in the midst of a massive transition in the investment landscape,” said David Steinbach, global chief investment officer, Hines. “The dynamics of the previous cycle – where unusually low interest rates propelled growth and easy leverage – have faded and are being replaced by a higher-for-longer interest rate environment where investors will need to focus on alpha generation.”

The report, titled “A new dawn: seizing real estate’s moment of opportunity”, highlights some asset classes as priority sectors to invest in. The living sector offers “significant opportunities as households increasingly favour renting over buying in developed markets,” and across the world there are acute housing shortages and shifting demographics.

The retail sector is set for continued growth after years of transformation, underpinned by strong consumer sentiment and robust wage growth, especially in the United States. The industrial & logistics sector is poised for “renewed momentum as supply and demand stabilise” and supply chain reconfiguration continues.

“We will likely look back on 2025 as a pivotal moment of recovery in many areas of the commercial real estate sector,” said Steinbach. “Now is the time for investors to put capital to work and reposition their portfolios.”

According to Hines’ analysis, as of the third quarter of 2024, just over 66% of global markets were in some phase of the Buy cycle, the highest level since 2016. Europe stands out with 75% of its markets in the Early Buy, Buy, or Strong Buy phases, the highest globally.

Industrial markets continue to show strong fundamentals, while prime office rents are rising in key cities such as London, Paris, and Amsterdam, driven by limited new supply and high demand for energy-efficient spaces. Retail investments in Europe remain attractive, particularly in cities with strong local spending and high tourism. The region’s retail markets, less saturated than their US counterparts, are recovering more rapidly.

In North America, opportunities abound in industrial assets and in the living sector, due to the increasing demand for single-family rentals. Asia remains diverse, with opportunities concentrated in Japan, South Korea, and Australia. Japan’s office market appears to have reached a bottom and is beginning to show signs of an upswing, while its residential sector continues to experience rent growth driven by inflation and improved fundamentals. In South Korea, Seoul stands out as one of the healthiest office markets globally, with low single-digit vacancy rates and strong rental growth.

“As we close the door on 2024 and look ahead to 2025, our data finds that the global real estate market presents a promising, but complex, landscape,” said Joshua Scoville, head of global research, Hines. “It’s our conviction that the year ahead will bring stability, clarity, and potential opportunity for global real estate investors as the dust settles and the asset class turns a corner into recovery.”

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