Key points –

1. Optimistic Outlook for 2024: There’s a general expectation of a moderate to strong increase in real estate investment activity in 2024, with 57% of experts globally predicting growth.
2. Significant Growth in Specific Sectors: The multifamily residential sector and the industrial and logistics sector are particularly highlighted for growth. For multifamily residential properties, 70% of respondents anticipate an increase in investment, while 66% see similar trends for industrial and logistics spaces.
3. Rental Market Predictions: There are widespread expectations of rent increases across various sectors. 90% of researchers foresee rent rises in the multifamily sector, with 81% expecting increases across the wider residential market. In the logistics sector, 92% predict rents will rise or remain stable.
4. Key Investment Strategies for 2024: Savills outlines specific investment strategies, including core and core plus strategies focusing on prime CBD offices, logistics, retail, and hotels in tourist destinations, and value-add strategies involving retrofitting prime office and retail spaces.
5. Geographical and Sectoral Variations: There is also attention on smaller, less liquid sectors like data centers, life sciences, and education, owing to their considerable investment potential driven by strong demand and limited supply.

2024 is shaping up to be a year of renewed vigor and promising opportunities, according to the latest report from Savills World Research. Let’s break down what this means for investors, home-seekers, and the everyday person interested in the property market.

A Positive Turn for Real Estate Investment

Researchers from around the globe are buzzing with optimism about the real estate investment climate in 2024. On average, 57% of experts anticipate a moderate to strong increase in investment activity. This is particularly noteworthy in specific sectors like multifamily residential properties and industrial and logistics spaces.

Highlight Sectors: Residential and Logistics

• Multifamily Residential: This sector, where demand is outstripping supply in numerous areas, is a hot spot with 70% of respondents expecting an upswing.
• Industrial and Logistics: With a strong foundational demand and an expanding post-pandemic manufacturing base, this sector is also poised for growth, with 66% of experts foreseeing an increase in investments.

Spike in Q3 2024

Mark your calendars for Q3 2024! Savills predicts a significant spike in investment activity around this time, led by major markets like the US and the UK.

Rent Predictions and Sector Insights

Residential Market

• Multifamily Sector: A whopping 90% of researchers predict rent increases here.
• Wider Residential Market: 81% forecast rent hikes across this broader sector.

Logistics Sector

A robust 92% of experts believe that rents in the logistics sector will either rise or stay stable, underpinned by solid consumer demand and a growing manufacturing landscape post-COVID-19.

Office and Retail Sectors

• Prime Office Space: In city centers, 73% of researchers foresee a rise in rents for prestigious office spaces.
• Quality Retail Outlets: With strong domestic or tourist footfall, 81% expect rental increases.

However, in the secondary office market, a more cautious outlook prevails, with 70% of experts predicting stable or declining rents, dependent on property upgrades.

Investment Strategies for 2024

• Prime CBD offices that align with current occupier needs.
• Prime logistics in most markets.
• Prime retail and hotels in tourist hotspots like France, Spain, Portugal, Australia, and Singapore.
• Prime living spaces in urbanized areas with rising rental demand, particularly in Singapore, Japan, Spain, Germany, the UK, and Italy.

Value-Add Strategies

• Upgrading offices in prime locations, especially in the Netherlands, Spain, Japan, South Korea, Australia, France, and Germany.
• Repositioning prime retail for higher rental returns, particularly in southern Europe and Asia.

Opportunistic Strategies

• Offices with potential for value increase.
• Managing and repositioning underperforming assets, like old shopping centers.

Expert Insights from Eri Mitsostergiou

Eri Mitsostergiou, Director at Savills World Research, emphasizes that 2024 is expected to be a significantly better year for global property investors. This optimism is driven by attractive yields, rising prime rents, and a realignment of buyer and seller expectations in markets where this hasn’t yet happened.

Mitsostergiou also notes that while performance parallels are expected across ‘prime’ sectors, geographical and regional variations will be more pronounced in secondary assets. Furthermore, sectors like data centers, life sciences, and education, despite their smaller size and liquidity, are highlighted for their strong investment potential due to high demand and limited supply.