More activity ahead for global real estate in 2025 - UBS
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MORE ACTIVITY AHEAD FOR GLOBAL REAL ESTATE IN 2025 - UBS
Greenshoots for real estate investing could be on the horizon for 2025, according to UBS which sees opportunities across the commercial and residential sectors.
The recent fall in U.S. treasury yields shows investors getting more confident that the Fed will continue cutting rates, and recent property market data suggests homebuyers think the same.
"Driven by lower capital costs, increased debt availability, and ample dry powder in private capital, we believe the global real estate market is poised for greater activity in the year ahead," writes UBS global wealth management CIO Mark Haefele.
He has three main considerations for investors, the first being sector focus.
"In the commercial segment, we think logistics properties, data centers, and telecommunication towers are well-positioned, particularly in the US and Europe, as they benefit from trends like e-commerce and artificial intelligence (AI) and have high barriers to entry."
In residential, UBS likes multi-family, senior, and student housing sectors, as well as high-quality Australian REITs and Tokyo real estate developers.
The second suggestion is to consider both public and private market exposure.
In listed markets, they see Singapore developers and REITs, along with Japanese developers benefitting most from rate cuts because these factors are not yet fully priced in compared to their U.S. and European counterparts.
In the private sphere, UBS likes real estate managers capable of generating income and capital growth, those who can execute opportunistic acquisitions and it also sees opportunities in real estate debt.
Finally, investors are urged to evaluate regional differences in direct real estate.
Strong rental growth and falling interest rates make Canada, the U.S., and continental Europe look the most attractive, while affordability issues make UBS less sanguine about the UK market.
"In mainland China, we remain cautious on overall residential investments," - despite a few years of downward adjustments and stimulus measures aimed at stabilizing the market.
(Lucy Raitano)
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