Industrial, logistics and multi-family residential will be the top picks for global real estate investors next year.
Colliers’ 2024 Global Investor Outlook report, released today, said that investors would continue to seek stability as challenging market conditions persist across EMEA into 2024.
Geographically, Colliers said six markets would be of greatest interest to investors in 2024: London, Paris, Berlin, Munich, Madrid and Amsterdam.
Colliers said London’s appeal had been strengthened, as the UK experienced the quickest pricing correction, resulting in the strongest uptick in investment activity in 2023, followed by Germany.
Further activity is likely to be unlocked through the first half of 2024 as sellers and buyers become more aligned on prices.
Damian Harrington, head of research, global and EMEA capital markets at Colliers, said: “Many investors feel industrial and logistics assets provide greater stability and growth potential, given their strong underlying fundamentals and structural drivers. Facing fewer lenders and higher borrowing costs, we are seeing investors pool funds and form alliances and joint ventures with partners who have the expertise to navigate specialist or sub-sector markets.”
Like industrial and logistics, the living sector has also shown more resilience. Investors are predicting the sector will be buoyed by simple supply-and-demand imbalances, caused by population growth and housing availability, along with affordability issues.
Alternative living classes, such as purpose-built student accommodation and senior housing, are being looked at keenly, while the growth potential offered by build-to-rent has been heightened by overall high prices and mortgage rates preventing more home ownership.
The report added that, as well as industrial and logistics and multi-family, brown-to-green conversions were also increasingly popular. A record proportion of investors surveyed – 25% – have ESG-based disposal and acquisition strategies in place, up from 10% two years ago. Colliers’ found that nearly 80% of investors expect sustainability-certified offices to command a premium, with 65% believing premiums will be upwards of 5% in EMEA.
Along with that, pockets of opportunity are continuing to emerge as distress forces companies to unlock capital via sale and leasebacks, and property funds face redemption pressures.
Luke Dawson, head of global and EMEA capital markets at Colliers, said: “We have heard from investors that stability is key. With anticipated ‘higher for longer’ interest rates to combat inflation, expectations for capital markets are tempered. If greater certainty emerges, along with the softening of underlying valuations, that will drive additional transaction volume next year. The best-positioned investors will be those who are ready to act on opportunity.”
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