D
avid Steinbach, Global Chief Investment Officer of Hines, believes 2025 will be a pivotal year for global real estate markets. According to Hines' 2025 Global Investment Outlook report, titled "A New Dawn: Seizing Real Estate's Moment of Opportunity," the market is transitioning into a new cycle of growth and recovery.

    As interest rates rise, investors must focus on generating alpha. Steinbach notes that 2025 will likely be remembered as a moment of recovery for many areas of commercial real estate. Now is the time for investors to act and reposition their portfolios.

    Hines identifies several priority sectors with high-conviction themes: Living, Retail, Industrial, and Office/Debt and Alternatives. The living sector offers opportunities due to acute housing shortages and shifting demographics, while retail is set for continued growth driven by strong consumer sentiment and robust wage growth.

    Industrial fundamentals are stabilizing, positioning the sector for renewed momentum. Return-to-work trends and niche sectors like student housing and digital infrastructure present favorable prospects for tactical investments. Fundamentals have increased modestly over the last couple of quarters, with positive net absorption in most U.S. markets.

    According to Hines' analysis, 66% of global markets are in some phase of the Buy cycle as of Q3 2024, the highest level since 2016. North America has over 60% of its markets in one of the first three Buy phases, with opportunities in industrial assets and the living sector.

    Europe stands out with 75% of its markets in the Early Buy, Buy, or Strong Buy phases, driven by strong fundamentals in industrial markets and rising prime office rents in key cities. Retail investments remain attractive in Europe, particularly in cities with strong local spending and high tourism.

    Asia remains diverse, with opportunities concentrated in Japan, South Korea, and Australia. Japan's office market appears to have reached a bottom, while its residential sector continues to experience rent growth driven by inflation and improved fundamentals. In South Korea, Seoul stands out as one of the healthiest office markets globally, with low single-digit vacancy rates and strong rent growth.

    As 2024 comes to a close, Hines' data finds that the global real estate market presents a promising but complex landscape. The year ahead will bring stability, clarity, and potential opportunity for global real estate investors as the asset class turns a corner into recovery.