JLL - Global Real Estate Perspective - Highlights

The fluid economic climate continues to influence central banks, and consensus expectations are that rates will remain higher for longer to combat inflation. The rising costs of debt and volatility in indices are influencing lender sentiment and market dynamics globally, and shifts in lending costs have now firmly taken hold in most markets. However, debt markets are still liquid and the availability of credit is solid, albeit at an elevated cost of capital. Loan originations continue to be balanced and diversified across lender types, and alternative lenders are emerging and seeking to provide financing solutions throughout the capital stack.

Price discovery continues in the real estate capital markets. Asset prices have undergone significant adjustments as a result of shifts in the economy, rates and lending markets. However, amid elevated rates, gains in bidding dynamics this year have levelled off in recent months, and the bid-ask spread is holding steady. The U.S. is furthest along in its price adjustments and valuations are now shifting across most sectors and markets in Europe and Asia. The constrained transaction market, especially for offices, is limiting pricing data points. We expect the bifurcation across property sectors and markets to be pronounced as improvements continue.

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