G
lobal commercial real estate (CRE) transaction volumes are at decade lows, but a convergence of trends is poised to drive a strong rebound. Despite some counterbalancing challenges, we expect robust growth in transaction volumes over the next few years.

    Key factors contributing to this outlook include:

    The rate-hiking period has ended, but markets remain cautious about terminal policy rates and term premia, which could keep longer-dated bond yields high for now. However, we believe investment activity will improve next year.

    The "denominator effect" has reversed, with global equity markets surging 57% since Q4 2022, potentially leaving institutional investors underweight in real estate allocations and creating opportunities for increased capital flows into the sector.

    Private closed-ended funds hold over $300 billion of assets in extension periods, setting up significant disposals and trading volumes as these funds unwind. While distress levels may impact sentiment, we expect an orderly path towards deleveraging to drive increased sales volumes.

    Appraisal-based valuations are starting to align with transactional trends, which could support more trading activity, reduce open-ended fund redemption queues, and make listed real estate investment trusts net buyers again.