Global real estate company JLL's quarterly research recently published sheds light on activity in the global real estate market in the first months of 2023;
This is against the background of the challenging economic situation, in which many countries are dealing with high inflation, rising interest rates, a decline in the labor market, and distress in the banking market, which adds to the volatility of the real estate market. These factors, according to the study, lead conference owners to enter into a "defense strategy," in which they pause transactions.
The authors of the study illustrate the slowdown in the global real estate market with the following figure: While in the first quarter of 2022, $291 million was invested in the total volume of global real estate investments, in 2023 a dramatic decline began with 'only' $128 million invested.
In general, according to the report, the quarter is characterized by restrained activity, as uncertainty in the market hinders the decision-making of asset owners and investors.
In the residential real estate sector: a decline of 65% compared to last year
Investor demand appears to continue to be residential real estate around the world, with operating investment remaining low and supply poor. However, rising financing costs, the macroeconomic situation, and market uncertainty show that it is still challenging to make trades when there are wide bidding spreads for transactions.
Accordingly, investment volumes declined significantly in the first quarter, with investors sitting on the fence waiting to see what will happen in the market.
The volume of transactions in the first quarter of 2023 shows a whopping 65% decline compared to the first quarter of 2022; The residential real estate market in the US remains stable despite a reduction in rental rates and rising interest rates.
Investors around the world are sitting on the fence waiting to see what will happen in the market. (Photo: ShutterStock)
And what about the prices? Continued uncertainty and loan constraints are holding back transaction markets, which require additional price disclosure.
Property pricing around the world has undergone many changes over the past year, with the U.S. leading the pricing adjustments, as it has seen the most significant adjustments since the start of 2022 in assets.
In Europe, the UK experienced the biggest real estate price adjustment in 2022, with other countries seeing volatile returns throughout the year. The pricing changes were not particularly significant across Asia Pacific.
More in Walla!
It's so delicious and simple: recipe for caramelized bananas
In association with Galil
In the investment sector: the slowest first quarter since 2012
The pressures facing markets during 2022 continue into 2023 as uncertainty halted decision-making and limited investment activity. Global investment experienced a slowdown at the beginning of the year, with investment volumes in the first quarter showing a 56% drop from the same quarter last year.
Broken down by region, we see a 61% decline in investment volume in North and South America, a 58% decline in Europe and the Middle East, and a 30% decline in investment volumes in Asia Pacific. Total investments in this quarter stood at $128 billion, with global investment volumes declining by 12% in the past year (past 35 months) compared to the previous 12 months.
The first quarter of 2023 is considered the slowest quarter in terms of investment activity since the second quarter of 2020, the height of the COVID-2012 crisis, and is also considered the slowest first quarter since <>.
Real estate investment activity around the world between 2007-2023 (Photo: screenshot, JLL)
In the office sector: Europe registers a decline of 24%, the sharpest in the world
Global office rental volumes in the first quarter showed a decline of 13% from the fourth quarter of 2022 and 18% from the same quarter last year.
Office rental activity fell globally in the first quarter, with Europe recording the sharpest decline (-24% from the same period last year), followed by the US (-19%) and Asia Pacific (-9%).
The activity of the office industry worldwide between 2007-2023 (Photo: screenshot, JLL)
In the hotel sector: There was a recovery, particularly in the Middle East
The hotel market continues to recover, with an increase of 6.8% in activity during the first two months of 2023 compared to the same period in 2019 (pre-COVID-89).
The strongest recovery was recorded in the Middle East, followed by North and South America and Europe. While Asia Pacific remains the only region that has not yet returned to pre-pandemic levels, performance has accelerated significantly over the past three months as China reopened its doors.
The opening of gates in China led to an 6.2019% increase in tourism compared to the first quarter of <>. The surge in global demand is expected to accelerate further during the year as there is a marked increase in leisure travel and growth in demand for group and corporate trips.
Dubai: The strongest recovery in the hotel and tourism sector was recorded in the Middle East (Photo: ShutterStock)
- Real Estate
- Abroad
Tags
- Real Estate