Commercial Real Estate outlook
Is there a storm brewing in Global Commercial Real Estate?
New research from PIMCO suggests that U.S. Commercial Real Estate values could fall by 5% over the next 12 months, driven down by stock market volatility, regulatory pressures and a drying up of overseas capital. Could this be a pattern for commercial property values around the world?
Commercial Real Estate is a “late-cycle” investment; traditionally the last asset class to turn down when interest rates begin to rise - and the uncertainty created by the UK's vote to leave the EU is expected to keep global interest rates lower for longer. But in the aftermath of BREXIT, many forecasters expect a change to the supply/demand equation for office space in London in particular.
As is usually the case, our curated research reveals a spread of views. Below are some of the best global CRE papers that we've come across in the last month or so:
U.S. Real Estate: A Storm Is Brewing (PIMCO, June 2016)
Pressure on U.S. commercial real estate from maturing loans, regulations, uncertain capital flows and volatility suggests prices could fall by as much as 5% over the next year. This dynamic will create financing gaps and dislocations across United States commercial real estate equity and debt markets, both private and public, over the secular horizon. For flexible capital, these dislocations could present lucrative investment opportunities.
Global Real Estate: Trends, cycles and shocks (TH Real Estate, June 2016)
This report provides insights into global commercial real estate cycles and trends so far this year. Based on the authors' analysis of each region, they provide their forecasts for H2 2016.
EU Referendum: impact on UK real estate (Aviva, June 2016)
Chris Urwin, Global Research Manager, Aviva Investors Real Estate, discusses the possible impact of Brexit on UK real estate.
2016 KPMG Real Estate Outlook Survey - A Canadian/US Comparison
This report provides invaluable insights into the real estate outlook for Canada and the United States. The outlook for 2016 is mostly positive though both changing financial conditions and demographic pressures have been observed.
U.S. Listed Real Estate during periods of rising rates (FTSE Russell, June 2016)
This document examines what happened to the U.S. listed real estate market during the most recent three increases in the Fed Funds rate. Special attention is given to the performance of different real estate sub-sectors.
Finding a Real Return With REITs (PIMCO, June 2016)
Two PIMCO specialists discuss two key questions about investing in real estate investment trusts (REITs).
The hunt for value in London's commercial property market (EY, June 2016)
Dramatic rises in London's commercial real estate rental prices are changing the make-up of the city. In their hunt for the best value office space, businesses are exploring areas of the city they would not necessarily have considered before.
Inside U.S. Real Estate: Key themes for 2016 (Principal Global Investors, 2016)
This paper by Pioneer Investments explores the outlook for U.S. Real Estate, focusing specifically on the economic outlook, Federal Reserve activity, income growth, capital market volatility and more.
UK Commercial Real Estate: An Uneven Recovery? (GAM, May 2016)
Jon Rickert, GAM Investment Director asks whether the commercial property markets in the UK is nearing a peak. He examines the opportunities for investors in real estate debt.
Australian Office Investment Review & Outlook (JLL, 2016)
This paper by Jones Lang LaSalle Australia provides important insights into the outlook for Australian commercial real estate.