8 February, 2019

With substantial dry powder targeting real estate, investors will continue to diversify into secondary markets in search of yield. The era of overall yield compression is over, and prime yields will be flat for most of 2019. We forecast an average total return of 5.1% per annum in 2019 and 2.7% for 2020, most of which will be driven by income return.

Weakening global growth means lower long-term interest rates, which will offset slightly weaker investor confidence in the first half of 2019. Cross-border investment—although from different sources than before, as Chinese property companies are substantially reducing outbound investment—will generally continue to boost capital flows, driven by the increased appetite of property companies.

Overall, capital flows will remain strong in 2019, shifting to core investments in diversified markets from more opportunistic assets, as investors seek out better pricing and more stable income growth.

2019 Global Real Estate Market Outlook

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