The housing market under strong pressure worldwide
A lack of real estate and a price discrepancies in hinder transactions
The pressures that markets faced in 2022 have extended into 2023. Uncertainty further stalled decision-making and delayed investment activity in the first quarter as repricing continues. Amid the ongoing cycle of rising interest rates, the tightness in the banking sector, which began in the US and later in Europe, brought additional volatility to real estate lending. These factors have led to tighter lending standards in most markets around the world.
While market dislocation is elevated and liquidity is tight, lending and trading markets remain active, despite the elevated risks in the economy.
According to JLL, the outlook for individual sectors remains mixed, with investor preferences for growth sectors strengthening as they develop long-term strategies and portfolio shifts. This brings continued focus to the industrial and logistics sectors, as well as living.
Investors' demand continues to target the lifestyle sectors globally, with strong fundamentals and even stronger operating performance driven by structural undersupply across all asset types. However, higher funding costs, macroeconomic headwinds and market uncertainty mean that deal-making remains difficult, with wide gaps between supply and demand in transactions. Investment volume declined significantly across all regions in Q1 as many investors remained on hold.
The US living sector remains resilient, despite a slowdown in rent growth and interest rates continuing to weigh on transaction activity. Lagging supply and a slowdown in the housing market further deepened the supply-demand imbalance across Europe, but tight financing conditions led to a further decline in investment volumes. The Asia-Pacific region continues to see growing interest in the living sector, although declining activity in Japan amid declining foreign buyers and widening supply-demand margins helped push regional volumes down.