2025 Market Outlook – Finding Sunny Skies in Cloudy Markets
Volatile and uncertain real estate markets have become familiar over the last few years amidst evolving capital markets and monetary policy, especially in relation to the cost and availability of debt capital. As we look forward to 2025, many of our base case assumptions remain consistent with the views we shared last year, but we anticipate broader acceptance of the market environment is likely to catalyze the beginning of a new real estate market cycle driven by: 1) A new era of interest rates – a “higher for longer” interest rate environment for the long end of the yield curve, regardless of the impact of monetary policy on the short end of the yield curve, and 2) survival of the fittest – the upcoming wall of debt maturities will finally unveil troubled real estate capital structures and generate opportunities for disciplined investors. While this piece examines this macroeconomic environment, the rest of our 2025 outlook series will dive further into the niche real estate strategies we believe are likely to provide the most attractive risk-adjusted returns for real estate investors in the coming year across global listed REITs, non-core private equity, and enhanced income debt, as we look for sunny skies in the middle of a cloudy backdrop.
