PwC – ULI. Emerging Trends in Real Estate. Climate of change
The shift in monetary policy has led to cap-rate compression in some office and logistics markets during 2019 and raised the possibility of further value increases to come in 2020. But secure, stable income remains the guiding light for the majority of the industry, especially this late in the cycle. With interest rates set to stay lower for longer and bond yields in many European countries in negative territory, real estate income retains its broad appeal to investors. Equity and debt are expected to remain plentiful for most real estate sectors. The notable exception is retail, still struggling in the face of online competition.
Yet there is little evidence of complacency given the inherent risks in a late-cycle market where values are above historic levels. Market participants are therefore being more careful than ever about how and where they deploy capital, which for many means focusing on cities that offer liquidity and connectivity.