Invesco’s Real Estate’s House View on today’s key trends
Perhaps unsurprisingly, geopolitical challenges and central bank decision-making continue to shape the global real estate landscape in 2022. From the Russia-Ukraine conflict to spiking inflation, the world economy faces a dramatic confluence of factors that are creating considerable uncertainty — even for asset owners with very long investment horizons.
The most recent Invesco Real Estate House View breaks down the key themes driving our own decision-making, as well as our outlook for the asset class in the coming months and years. Here are the top themes we’re watching right now and what they mean for global real estate investors:
Geopolitics: There is considerable uncertainty about how long the Russia-Ukraine conflict could last and how far it could spread. While the risks right now are primarily focused on Europe and its reliance on Russian natural gas and oil, the U.S., UK, and the Asia Pacific region could see slower economic growth if the conflict becomes a lengthy one. If that happens, we see Europe entering recession, and the U.S. and Asia Pacific region experiencing slowing, but positive, growth.
Inflation: Inflation concerns remain significant across the globe, with the Russia-Ukraine conflict adding to the uncertainty. Real estate has historically provided a good inflation hedge, supported by revenue streams that can adjust along with shifting conditions. And while rising construction costs could restrict new supply, it also has the potential to benefit owners of existing stock.
Supply Chain: The global economy is facing record levels of stress in supply chains largely due to a supply and demand mismatch, China’s Zero-COVID policy, and the Russia-Ukraine conflict. Companies are recognizing the risks of offshoring production of critical products. In response, they are holding more inventory and looking to replace offshoring with onshoring. The impact of these factors will be felt differently around the world, however, one sector that could potentially benefit is logistics.
For more real estate themes and research, contact your institutional Invesco representative about the Invesco Real Estate House Views (note: for institutional investor use only).
Where individuals or the Invesco Real Estate business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell securities or financial instruments and it should not be considered financial advice. Investors should consult a financial professional before making any investment decisions if they are uncertain whether an investment is suitable for them.