JLL recently released its Global Real Estate Perspective, which explores property sectors and the outlook for global real estate markets.
The report noted that the Bank of Canada has lowered its benchmark policy interest rate from 5 per cent to 4.5 per cent. There is consensus among rate watchers that the policy rate could fall to anywhere from 2.75 per cent to 3.5 per cent by the end of 2025.
Compared to late 2023, investor sentiment is more positive at mid-year, as many of the largest markets are expecting easing monetary policies by year-end. Debt market conditions continue to improve and broaden as well. Over the first half of the year, bidder activity in aggregate increased, despite market conditions differing due to the higher rate environment.
In Canada, there has been a jump in property sale volume in the spring, which is partially due to lower bond yields, but also due to the implementation of the federal government’s new capital gains inclusion rate that increased the cost of asset sales after June 25, 2024.
Leasing volumes in Canada continued to fall in the second quarter. In terms of office leasing, the report revealed it is at its lowest point since 2020 as tenants weigh their own space needs as well as the broader economic climate.
Global office leasing activity continued to strengthen from 2023 levels during the second quarter, with volumes 10 per cent above levels from a year earlier.
Industrial absorption in Canada reached -3.9m s.f. in the second quarter, which marks the slowest quarter since JLL began tracking industrial demand 10 years ago.
Canada’s major cities continued to see retail availability falling and rents rising. Retail sales have been flat on an inflation-adjusted basis, however, population growth has helped boost sales.
Global hotel revenue per available room (RevPAR) remained high through the first five months of 2024 at 13.2 per cent above 2019 levels. While performance remains robust, demand has begun to normalize in many markets as growth relative to 2019 has slipped over the past three months, driven by lower consumer savings.
During the second quarter, industrial absorption across the globe was varied as volumes rose in EMEA and Asia Pacific following a slow start to the year, but stalled in North America. Vacancy rates across all three regions remain elevated due to record-high deliveries over the previous 12 months. According to the report, rental growth is still positive but is beginning to plateau.
