By: RICHARD BARKHA M, Global Chief Economist & Global Head of Research at CBRE
The overall outlook for global real estate is positive as we move into the second half of 2021. COVID-19 remains a risk, especially from virus variants, but the vaccine program in the developed world has turned the tide. The big economies are re-opening and a fast-paced recovery is well underway.
There is much reason for optimism as we move into the second half of 2021. COVID-19 remains a risk, especially from virus variants, but the vaccine program in the developed world has turned the tide. The big economies are reopening and a fast-paced recovery is well underway. This will extend through 2022 as vaccination programs accelerate worldwide before “normal” economic growth resumes in 2023. Interest rates will rise slowly over that period, but we do not expect an extended period of high inflation.
Real estate capital markets will continue to bounce back in 2021 but will not reach the levels of activity seen in 2019 due to uncertainty in the office market. Real estate pricing remains firm. We see continued cap rate compression in industrial and multifamily, balanced by slight cap rate expansion for retail and Class B and C office assets. Debt markets will remain fully supportive
of real estate investment over the next 12 months, even if the Federal Reserve starts to scale back its purchases of mortgage-backed securities.
