Global real estate market: review 2023 and outlook 2024 from a financial expert's perspective

Global real estate market: review 2023 and outlook 2024 from a financial expert's perspective

According to a report from themarket.ch, the situation on the global real estate markets eased somewhat towards the end of 2023 thanks to falling interest rates. The GPR250 index, which is made up of the world's 250 most liquid real estate investment trusts (REITs), recovered over 20% overall in November and December and ended the year with a pleasing total return of around 11% (in local currencies).

The strong upward movement in REIT prices was largely driven by expectations of interest rate cuts for 2024 and 2025. Five-year swap rates fell by over 100 basis points in the dollar, euro and pound sterling during the same period.

The long-term development of global listed and unlisted real estate investments shows similar performance. However, the development of unlisted real estate investments generally lags behind that of listed investments. This is due to the more volatile stock markets and external portfolio valuations.

Despite the rally in the REIT sector, the situation on the real estate markets remains challenging. The negative trend caused by interest rate increases and a high volume of expiring mortgages is leading to illiquid markets and a significant refinancing gap.

Investors are less positive about new investments in real estate and capital raising has also declined. Real estate developers in particular are struggling with financial difficulties, which is causing problems in various segments of the real estate market.

The decline in inflation and financing costs has brought some relief in recent months. Investors can look to the new year with more optimism, even if initially negative news will dominate. Nevertheless, uncertainty remains high and the situation on the real estate markets remains challenging.