How the global commercial real estate market is developing
In 2022, the global commercial real estate market will grow by 18%. Its volume was about 550 billion dollars. According to the forecasts for 2023, the growth of the global market will be at the level of 14% – up to $650 billion.
As for the dynamics of the sector by region, good dynamics were observed in Asia-Pacific, where the volume amounted to about $124 billion. The total market in the Americas exceeded $240 billion. However, the world’s leading commercial real estate sector is in the United Kingdom, where annual growth was 19%. In second place is Germany with an index of 17%.
Experts predict that in 2023 the global market will maintain its growth rate. Good development will show commercial real estate in Europe, and in the Asia-Pacific, region dynamics will slow down. South and North America will increase the volume several times, reaching the level of 2007. The largest growth will be in the USA and Canada.
According to analysts’ forecasts, the commercial real estate market has good prospects in terms of capital inflow. The volume of investment in the sector will exceed $1 trillion, which will be recorded for the first time in the last 7 years. In 2022, the figure was $978 billion, an increase of 8.4% compared to the previous period. Africa and the Middle East will be promising regions for investors. However, the leader here will be Europe, where the volume of investments in commercial facilities will grow by 13-15%.
The focus of investors will shift slightly from large cities to emerging markets with good potential. This situation will lead to an even stronger increase in rental rates. This trend has been continuing since 2022, during which rental prices rose by 2-3%.
According to experts, price increases are expected to occur primarily in major cities such as New York, London, Paris, and Tokyo. Rental growth will also be seen in Latin America and Asia.
The main driver of the post-pandemic commercial market has been urbanization. In addition, the sector has undergone a digital transformation, which has contributed to increased investment. Each region is also experiencing different processes, for example, in China and Canada, office space absorption trends are growing, while in Europe and the USA, such processes are less evident.
We should also pay attention to the problem of the market – the growth of debt. The rise in interest rates has had a painful impact on the sector, and if residential real estate was the first to suffer, now there are more and more threats in the commercial real estate segment.