Savills World Research 2024 Outlook: Global Investment Activity Set To Rise, Spiking In Q3

Savills researchers from around the world are predicting a more positive real estate investment environment in 2024, with 57% on average expecting a moderate to strong increase in investment activity next year, although this rises to as high as 70% of respondents for multifamily residential property and 66% of industrial and logistics.

Savills says that it expects investment activity to spike in Q3 2024, with recovery driven by a number of major markets – including the US and UK.

The international real estate advisor is most optimistic about activity in global residential markets, particularly the multifamily sector, where demand outstrips supply in many areas, and the logistics sector, buoyed by its strong fundamentals. 90% of Savills researchers across the globe expect rent rises in the multifamily sector with 81% forecasting rent increases across the wider residential market. In the logistics sector, 92% predict that rents will rise or remain stable against a backdrop of resilient consumer demand and an expanding post Covid-19 manufacturing base.

For the office and retail sectors, the majority of Savills researchers expect stable or rising prime real estate rents, be it prestige office space in city centres (73% of researchers predict a rental increase) or quality retail outlets with strong domestic or tourist footfall (81%). Meanwhile, in the secondary office market, 70% of respondents expect rents to remain stable or drop in the year ahead - any rent rises are likely to be dependent upon upgrading these properties.

Savills research top picks for 2024, depending on investor strategy:

Core and core plus strategies:

• Prime CBD offices that meet current occupier requirements
• Prime logistics across most markets
• Prime retail and Prime hotels in tourist destinations, especially France, Spain, Portugal, Australia and Singapore
• Prime living across in places with strong urbanisation trends and rising rental demand, especially Singapore, Japan, Spain, Germany, the UK, and Italy

Value-add strategies:

• Retrofitting/repositioning of offices in prime locations, especially across the Netherlands, Spain, Japan, South Korea, Australia, France and Germany
• Retrofitting/repositioning of prime retail, particularly in southern Europe and Asia, for higher rental returns

Opportunistic strategies:

• Offices with reversionary potential
• Asset management of underperforming assets i.e. repositioning old shopping centres

Eri Mitsostergiou, Director in Savills World Research, comments: “2024 should be a much better year for global property investors, with a sustained bounce back expected as yields look more attractive,
prime rents rise, and repricing starts to re-align buyer and seller expectations in markets where this has yet to be seen. Our researchers are predicting broad parallels in performance between sectors at the ‘prime’ end of each sector, however, there are likely to be more pronounced geographical regional variations among secondary assets.

“While not present in all global regions, where they do exist, researchers have also highlighted that strong drivers of demand and limited supply underpin the considerable investment potential of smaller and less liquid sectors such as data centres, life sciences and education.”

Alan Cheong, Executive Director, Research and Consultancy at Savills Singapore adds: “Market consensus has it that the interest rate cycle has peaked and may decline sometime in the next few quarters. Should this be the case, we are of the view that the Singapore’s investment market would correspondingly look brighter in 2024. Any decline in interest rates would benefit the big-ticket investment property classes where buyers are more interest rate sensitive.”