December 14, 2018
Subject | 2019 Investment Outlook Series | Industry views | Institutional | Invesco | Macro views
- Risks today are crystallizing; many are more global in nature.
- Pricing remains attractive; however, yield/cap rate compression is largely behind us.
- Total returns in 2019 are likely to be driven by net operating income growth.
Strong growth in developed economies should continue to support favorable real estate fundamentals in the near term. The baseline scenario remains very positive, and global listed equities’ earnings yields are providing a positive spread over local government bonds, a sign that real estate is still fairly priced. Yet macro risks to the outlook are perhaps now greater today than in prior years; many are increasingly global in nature. They include rising populism, an escalation of the US-China trade war, a monetary policy normalization misstep, a disorderly Brexit or a China debt crisis. Should any one of them materialize, it would have the potential to derail the global growth outlook to a measurable degree.Comments Off on Real estate: The outlook for real estate fundamentals is positive, but risks remain