Real estate – understanding the new normal
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Real estate – understanding the new normal

2022 was a year of many unforeseen events – from geopolitical upheaval leading to slowing economies around the world, to surging inflation and rising interest rates – all marking the end of the property cycle.

The latter part of 2022 was more challenging, and uncertainty will continue into 2023 until the macro-economic picture becomes clearer.
Supply-chain pressures and high energy prices that have seen decades-high inflation levels and a generational squeeze on household incomes will begin to ease and inflation will fall back, perhaps enough to prompt policy rates to stabilise in the latter half of the year, but progress will no doubt be slow. Major world economies will also slow but the fall in growth is expected to be more modest than perhaps thought even only a few months ago. Crucial elements to watch for are how deep any recessions are and how quickly economies rebound.
Higher interest rates will be a key driver of the reset of real estate markets in 2023 after a prolonged period of ultra-loose monetary policy. The more expensive financing will see yields soften and a value correction across all sectors. Even as markets slow and benchmark pricing finds a new norm, opportunities will remain in real estate across the world.
Some opportunities will be on a shorter horizon and play to equity investors and the window of opportunity is expected to be narrow. Others will be on a longer-term horizon as long-term cyclical trends are favourable to high quality centrally located stock as hybrid working becomes the norm; logistics, particularly in undersupplied markets dominated by lower grade stock; and urban logistics, as consumers demand ever shorter deliver times. There is also a need to address residential, a chronically undersupplied sector that also provides a level of inflationary hedge. In parallel we are seeing an accelerated shift to more energy efficient buildings and ESG (environmental, social and governance) really coming to the fore. 2023 will be nothing if not interesting.

Interested in learning more?

Where next for real estate? With sections on the UK, Continental European and US real estate our team take a closer look at the economic backdrop, activity in 2022, the outlook for 2023 plus strategy calls across various sub-sectors. Download the full Real Estate Outlook to discover more.
17 mars 2023
Stewart Bennett
Stewart Bennett
Global Head of Alternatives
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Real estate – understanding the new normal

Important information

© 2023 Columbia Threadneedle Investments. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies.

 

Important Information: For use by professional clients and/or equivalent investor types in your jurisdiction (not to be used with or passed on to retail clients).

 

This document is intended for informational purposes only and should not be considered representative of any particular investment. This should not be considered an offer or solicitation to buy or sell any securities or other financial instruments, or to provide investment advice or services. Investing involves risk including the risk of loss of principal. Your capital is at risk. Market risk may affect a single issuer, sector of the economy, industry or the market as a whole.

 

The value of investments is not guaranteed, and therefore an investor may not get back the amount invested. International investing involves certain risks and volatility due to potential political, economic or currency fluctuations and different financial and accounting standards. The securities included herein are for illustrative purposes only, subject to change and should not be construed as a recommendation to buy or sell. Securities discussed may or may not prove profitable. The views expressed are as of the date given, may change as market or other conditions change and may differ from views expressed by other Columbia Threadneedle Investments (Columbia Threadneedle) associates or affiliates. Actual investments or investment decisions made by Columbia Threadneedle and its affiliates, whether for its own account or on behalf of clients, may not necessarily reflect the views expressed. This information is not intended to provide investment advice and does not take into consideration individual investor circumstances. Investment decisions should always be made based on an investor’s specific financial needs, objectives, goals, time horizon and risk tolerance. Asset classes described may not be suitable for all investors.

Past performance does not guarantee future results, and no forecast should be considered a guarantee either. Information and opinions provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. This document and its contents have not been reviewed by any regulatory authority.

 

In UK Issued by Threadneedle Asset Management Limited. Registered in England and Wales, Registered No. 573204, Cannon Place, 78 Cannon Street, London EC4N 6AG, United Kingdom. Authorised and regulated in the UK by the Financial Conduct Authority. In the EEA issued by Threadneedle Management Luxembourg S.A. Registered with the Registre de Commerce et des Societes (Luxembourg), Registered No. B 110242, 44, rue de la Vallée, L-2661 Luxembourg, Grand Duchy of Luxembourg. In Switzerland issued by Threadneedle Portfolio Services AG, Registered address: Claridenstrasse 41, 8002 Zurich, Switzerland.

 

This document is distributed by Columbia Threadneedle Investments (ME) Limited, which is regulated by the Dubai Financial Services Authority (DFSA). For Distributors: This document is intended to provide distributors’ with information about Group products and services and is not for further distribution. For Institutional Clients: The information in this document is not intended as financial advice and is only intended for persons with appropriate investment knowledge and who meet the regulatory criteria to be classified as a Professional Client or Market Counterparties and no other Person should act upon it. 305818 (02/23).

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Important information

© 2023 Columbia Threadneedle Investments. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies.

 

Important Information: For use by professional clients and/or equivalent investor types in your jurisdiction (not to be used with or passed on to retail clients).

 

This document is intended for informational purposes only and should not be considered representative of any particular investment. This should not be considered an offer or solicitation to buy or sell any securities or other financial instruments, or to provide investment advice or services. Investing involves risk including the risk of loss of principal. Your capital is at risk. Market risk may affect a single issuer, sector of the economy, industry or the market as a whole.

 

The value of investments is not guaranteed, and therefore an investor may not get back the amount invested. International investing involves certain risks and volatility due to potential political, economic or currency fluctuations and different financial and accounting standards. The securities included herein are for illustrative purposes only, subject to change and should not be construed as a recommendation to buy or sell. Securities discussed may or may not prove profitable. The views expressed are as of the date given, may change as market or other conditions change and may differ from views expressed by other Columbia Threadneedle Investments (Columbia Threadneedle) associates or affiliates. Actual investments or investment decisions made by Columbia Threadneedle and its affiliates, whether for its own account or on behalf of clients, may not necessarily reflect the views expressed. This information is not intended to provide investment advice and does not take into consideration individual investor circumstances. Investment decisions should always be made based on an investor’s specific financial needs, objectives, goals, time horizon and risk tolerance. Asset classes described may not be suitable for all investors.

Past performance does not guarantee future results, and no forecast should be considered a guarantee either. Information and opinions provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. This document and its contents have not been reviewed by any regulatory authority.

 

In UK Issued by Threadneedle Asset Management Limited. Registered in England and Wales, Registered No. 573204, Cannon Place, 78 Cannon Street, London EC4N 6AG, United Kingdom. Authorised and regulated in the UK by the Financial Conduct Authority. In the EEA issued by Threadneedle Management Luxembourg S.A. Registered with the Registre de Commerce et des Societes (Luxembourg), Registered No. B 110242, 44, rue de la Vallée, L-2661 Luxembourg, Grand Duchy of Luxembourg. In Switzerland issued by Threadneedle Portfolio Services AG, Registered address: Claridenstrasse 41, 8002 Zurich, Switzerland.

 

This document is distributed by Columbia Threadneedle Investments (ME) Limited, which is regulated by the Dubai Financial Services Authority (DFSA). For Distributors: This document is intended to provide distributors’ with information about Group products and services and is not for further distribution. For Institutional Clients: The information in this document is not intended as financial advice and is only intended for persons with appropriate investment knowledge and who meet the regulatory criteria to be classified as a Professional Client or Market Counterparties and no other Person should act upon it. 305818 (02/23).

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