By Michael Gobitschek Portfolio Manager
With many property markets improving and delivering positive returns in 2024, investors are increasingly hopeful that global real estate has finally turned a corner.
After a strong July, global listed real estate is now 3.8% higher for 2024 in EUR, lagging the wider global equity market by around 10 percentage points year-to-date[1]. The US enjoyed a particularly strong summer with REITs rising over 5% as it now seems inevitable that the Federal Reserve will finally begin cutting interest rates in September[2]. With European property markets also improving and delivering positive returns in 2024 – including Scandinavia which experienced some of the worst recent losses – investors are increasingly hopeful that global real estate has finally turned a corner.
Since interest rates began rising in 2022, share prices have largely been on a downward path, both in absolute terms and relative to broader equities. Now, with expectations for borrowing costs in the US and Europe to fall by 2.0% and 1.2%, respectively, over the next 12 months, a positive reversal could well be underway[3].