As the global commercial real estate market (CRE) passes its peak high interest rates, the United States and Europe are showing signs of a gradual recovery, while Asia presents investment opportunities centered around growth sectors.
IGIS Asset Management recently announced on the 31st that its Strategic Research Department has released the '2025 Global Commercial Real Estate Outlook' report.
According to the report, there are opportunities for a rebound in the commercial real estate market. While political risks are increasing and uncertainty is re-emerging due to the pace control of existing interest rate cuts amid additional inflation concerns, recovery factors are also beginning to appear according to the cycle.
In the United States market, which accounts for the largest share of the global commercial real estate market, the demand for offices is gradually recovering following the strengthening of major corporations' 'RTO (Return to Office)' policies since the second half of last year. Additionally, the decrease in new supply is positively impacting the formation of price bottoms and the recovery of investment sentiment.
Looking at other sectors in the United States, the logistics sector has seen an increase in short-term risks due to slow e-commerce growth rates and increased supply; however, gradual stabilization is being observed due to increased manufacturing logistics stemming from nearshoring and onshoring trends. The multifamily sector is showing a trend of increased investment driven by higher dwelling costs and an increase in the number of households.
Turning to Europe, the market slowdown has persisted the longest among global regions. However, expectations for a fundamental recovery in the European economy and a price upturn in commercial real estate are raising market expectations. While the logistics and multifamily sectors have maintained good revenue over the past five years, the office and retail sectors have shown low revenue but are trending towards recovery since last year.
The Asia-Pacific region has rapidly shown a recovery in office demand following the COVID-19 pandemic, but it remains at a lower level than the historical average. China and Australia are expected to see increased expectations for long-term rental price growth due to a slowdown in office supply. Singapore, South Korea, Japan, and Australia are expected to see expansion in their commercial residential markets, driven by rising home purchase prices and an increasing aging rate.
Additionally, the report anticipates that technological innovations such as artificial intelligence (AI) will increase volatility in the asset growth cycle. It is analyzed that there needs to be consideration of strategies to respond to changes in the business environment due to growth in the tech industry during large-scale investments.
Park Jung-min, Head of Team at IGIS Asset Management, noted, "While uncertainty in the U.S. economy is expected to increase for the time being, policies focusing on domestic stimulus, robust fundamentals, and a recovery in the European economic cycle are expected to lead the commercial real estate market to a gradual recovery. He added, "Asia has recorded relatively high revenue in traditional sectors, but going forward, the hurdles for securing revenue through sales are expected to rise, and investments focused on rental revenue along with securing additional revenue in growth sectors such as housing and data centers are likely to be effective."