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Capital markets momentum continues, but headwinds are building

Global Real Estate Perspective May 2022

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Diminishing operational uncertainty, robust demand and abundant liquidity spurred a flurry of activity and allowed Q1 2022 to be the most active first quarter on record. Global volumes climbed 47% year-over-year to US$292 billion, with all three regions posting healthy gains in transaction activity. The composition of capital is diverse and evolving, supporting strong liquidity and healthy bidder pools. Despite the robust investment market conditions during the first quarter, the markets face renewed headwinds as a result of elevated inflation, geopolitics and rising interest rates.

This article is part of JLL’s Global Real Estate Perspective

Investment into hotels, retail and offices is now growing on par with or in excess of the overall market. The recovery of physical office occupancy and leasing, robust consumer spending and rebounding leisure and business travel has improved investor sentiment across these sectors. Investors remain focused on portfolio diversification and are aligning investment strategies to longer-term economic and demographic shifts, benefitting logistics, living and healthcare assets.

A prolonged period of low borrowing costs came to a close during the first quarter. Amidst market volatility and elevated inflation, lenders are increasingly focused on mitigating risk. This has initiated a shift in the markets, increasing the cost of debt for borrowers and reintroducing an increased focus on price discovery.