Physical Address
304 North Cardinal St.
Dorchester Center, MA 02124
Investing.com — UBS believes that investors should gradually increase exposure to global real estate, citing improved market conditions and good investment opportunities.
In a letter to clients, UBS highlights key trends and forecasts shaping the global real estate market.
The real estate sector is facing major challenges, with sales down 44% in 2023 compared to a paltry 2022.
However, UBS projects the return of global sales to $800 billion in 2024, up from $600 billion in 2023.
“The market volume increased to USD 1.25tr in 2021; The investable global real estate market is estimated at USD 35tr,” the bank wrote.
However, the lack of forced sellers is said to have low sales volumes.
“Affluent investors are starting to spend more,” UBS noted, highlighting their strong acquisition position.
Leasing activity in key sectors such as high-end offices, retail and hotels remains subdued but is showing signs of recovery, according to the bank.
Meanwhile, rental incomes are rising due to reinvestment and indexation, which UBS believes will play a key role in the ongoing valuation corrections.
Looking ahead, the bank expects inflation and interest rates to peak, making real estate investment even more attractive as rising yields offer good opportunities. They predict growth in rental income will pay for quality adjustments, and they don’t foresee a significant expansion of credit due to financial stress.
After a challenging 2023, which saw an overall loss of 4.1%, UBS expects that global real estate will post a revenue loss of 3.6% but a revenue gain of 4.5% in 2024. In 2025, they predict returns that exceed the long-term average of 7.5%. , driven by a 9% rebound in transaction volume.
