2023 may be an unpleasant year for most investors. However, according to a survey by the Savills Global Research Network, many of the major themes that occupy their minds this year will continue to influence 2024.
The economic outlook will continue to influence investor sentiment and trading activity. The property market is closely related to the global economy, but economic issues have become particularly important due to uncertainties about future growth, inflation and interest rate movements. However, the IMF says the global economy is now "struggling" rather than "moving at a rapid pace." The resilient economy of 2023 is now challenged by high interest rates, and 2024 is off to a bad start. Although the United States is still growing against the trend, the European economy is stagnant.
However, despite the gloomy economic outlook, Savills remains unanimous in its hopes for a "soft landing". Despite contradicting historical experience, inflation is trending downward, supported by a continued strong labor market, and there is currently no clear catalyst to trigger a deeper recession. And, with interest rates peaking, the first conditions for stability have been met, which will help stabilize the property market** and ultimately drive a recovery in investment activity.
However, there are many more drivers than just the economy, the value of the property market. In the Savills survey, demographic and behavioural factors were identified as the second most important theme for property market investment. This is especially critical for the residential sector, as demographic changes and urbanization determine the type of housing needed in each region.
The good news is that the population is much easier than the economic outcomes and future regulatory changes. The residential sector is very sensitive to regulations, and many** are considering rent regulations to improve housing affordability, which, if implemented properly, can both protect tenants without hindering new development, but if too harsh, it can exacerbate existing ** shortages by scaring off new development.
Environment is another key topic. The office property market has seen very different results in terms of green building certification. In Europe in particular, regulations are targeting the energy performance of commercial buildings, presenting both opportunities and challenges for investors over the next 12 months.
Technology is often the disruptor of the property market;In the retail sector, it is the rise of e-commerce, while in the office property market, it is the rapid development of remote work technology triggered by the COVID-19 pandemic. Of course, technology can also be an agent of positive change, such as generative AI to improve the sustainability of buildings, or improve the efficiency of logistics facilities to alleviate labor shortages. For investors, the opportunities to develop the infrastructure that supports this growth are innumerable.
Geopolitics is quickly infiltrating the negotiating tables of multinational corporations, especially in the logistics industry. This is especially important for the logistics industry, as they need to adapt to changes in the global ** chain and respond to recent trends such as the acceleration of near-sourcing and friend-source. With around 40% of the global population in leadership elections over the next 12 months, geopolitics will continue to cause market volatility over the next year. Multinational investors need to consider geopolitical factors when deploying capital.
While environmental issues continue to lead the environmental agenda, the property market's ability to deliver social value is increasingly recognized as a driver of financial returns and future preservation of assets. It is expected that there will continue to be new developments in this area, including efforts to create recognition standards similar to those available in the field of environmental protection.
Overall, 2024 will be a critical year for global property market investment, with economic, demographic, environmental, technological and geopolitical factors shaping the market landscape. Investors need to keep an eye on these big themes and seize the timing to capture positive sentiment and activity changes.