Dr Indraneel Karlekar, global head of research and strategy at Principal Real Estate Investors, believes combined economic factors are making commercial real estate attractive for investors.
“Slow growth and an accommodative global central banking policy regime should create a conducive environment for real estate investment strategies.”
“Since supply is expected to remain modest by historic standards, a not too hot, not too cold economic environment should allow owners to continue pushing rents above inflation,” Dr Karlekar explained.
The researcher said a volatile global market, including global tensions between the US and China, can have a positive impact on real estate investors.
Noting a 70 per cent probability of expanding over the next 12 months – but says there is a 30 per cent probability of global recession – Dr Karlekar said central banks will do whatever it takes to accommodate growth.
“Central banks are not likely to rush the removal of monetary accommodation and, thus, keep low interest rates in place, which support property valuations. When coupled with the ongoing demand for income, commercial real estate should remain an attractive choice within the suite of global options investors consider in 2020", Dr Karlekar said.
Finally, Dr Karlekar discussed how changing demographics will provide further opportunities for real estate investors.
“The way people live and work will evolve and offer real estate investors multidimensional opportunities to meet growing space needs.”
The market is tipped to be impacted by new policy as well as demand drivers such as mobility, affordability and advances in technology, according to Dr Karlekar.
“Investors that recognise the multiple layers and nuances of global demographic changes and adopt a flexible approach to meeting this changing need will find success in long-term strategies that harness one of the greatest structural shifts of the 21st century,” he concluded.
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