Transaction activity at decade low, but renewed momentum emerging

Global Real Estate Perspective February 2024

Interest rates and capital costs remain elevated, causing bid-ask spreads in commercial real estate markets to persist and contributing to the decline in transaction volumes. Direct investment declined globally during Q4, down 23% year-over-year to US$166 billion. This brought full-year 2023 volumes to US$594 billion, reflecting a decrease of 44% compared to 2022 and the lowest level of direct investment in over a decade. Fundraising for closed-end funds trended similarly, decreasing by 28% against 2022 to US$142 billion in full-year 2023.

This article is part of JLL’s Global Real Estate Perspective

While all major sectors experienced declines in 2024, the outlooks across the major property sectors in the short- and long-term remain mixed. Pricing and liquidity for office assets are under pressure, amid weak global sentiment from investors and lenders. Asset performance is highly polarized, and the recovery and growth in office fundamentals will be driven by best-in-class assets. However, sentiment for logistics, living and select alternative growth sectors remains positive despite volumes declining globally, as markets in the sector have repriced quickly. The living sector was the most active throughout the year and will be a beneficiary of sector diversification globally.