As we settle into 2024 with the pandemic now firmly behind us, there are several key factors are that are shaping the global outlook, presenting both challenges and opportunities for investors, developers, and stakeholders alike.

This is according to Yael Geffen, CEO of Lew Geffen Sotheby’s International Realty who adds: “We are on the cusp of a changing era and need to be mindful that we are currently exerting unprecedented influence in shaping the future for generations to come.

“The good news is that the more immediate outlook is for increased activity on the back of more attractive yields, with prime rents rising and repricing starting to re-align buyer and seller expectations so savvy long-term investing is what’s required right now.”

Geffen says that the following are key emergent themes that will define the trajectory of the real estate sector in 2024 and beyond.

Normalisation: Adapting to a New Reality

The term "normalisation" has become a recurrent theme across various sectors as the global economy strives to find post-pandemic equilibrium and in real estate, this entails recalibrating strategies to align with shifting market dynamics. Following the tumultuous fluctuations witnessed during the pandemic, markets are gradually stabilising, albeit at varying paces regionally.

One notable aspect of normalisation is the reemergence of traditional demand drivers. Urban centers, once deemed less desirable due to remote work trends, are experiencing renewed interest as companies adopt hybrid work models. Consequently, commercial real estate in many central business districts (CBDs) is witnessing a revival, albeit with a newfound emphasis on flexible office spaces and amenities catering to the evolving needs of tenants.

Residential real estate markets are also undergoing normalisation, characterised by more sustainable price growth and a return to pre-pandemic transaction volumes. However, affordability remains a concern in many metropolitan areas, prompting policymakers to explore innovative solutions to address housing accessibility without destabilizing markets.

Debt in the Spotlight: Managing Financial Risks

Amidst the backdrop of normalisation, the spotlight on debt within the real estate sector intensifies. The prolonged low interest rate environment facilitated substantial borrowing, driving asset prices to record highs, however, the subsequent rise in interest rates looms large, posing potential challenges for highly leveraged entities.

Debt levels in commercial real estate, particularly in sectors like hospitality and retail, are under scrutiny as the recovery remains uneven across segments. Investors and lenders are exercising caution, prioritising asset quality and sustainability in their financing decisions.

Additionally, regulatory interventions aimed at curbing excessive leverage are influencing borrowing practices, fostering a more prudent approach to debt management within the industry.

Mixed Macroeconomic Picture: Navigating Uncertainty

The global real estate landscape in 2024 is characterised by a notably mixed macroeconomic picture, shaped by divergent recovery trajectories and geopolitical complexities.

While some regions are experiencing a strong resurgence of economic growth bolstered by fiscal stimulus measures, others are grappling with persistent challenges, including inflationary pressures and geopolitical tensions.

The lagged effects of monetary tightening, geopolitical instability, and election uncertainty in major economies are creating additional potential risks to the outlook. Risks remain elevated, and signals of predictability will emerge only as the year progresses.

In this environment, adaptability and agility are paramount for real estate stakeholders and understanding local market dynamics, geopolitical risks, and macroeconomic trends is essential for making informed investment decisions.

Furthermore, diversification across geographies and asset classes can mitigate exposure to risk, ensuring resilience in the face of uncertainty.

Strategic Investing: Embracing Innovation and Sustainability

Against the backdrop of normalisation, debt concerns, and macroeconomic nuances, strategic investing emerges as a linchpin for success in the real estate sector. Embracing innovation and sustainability are key components of strategic investment strategies, as stakeholders seek to future-proof their portfolios and capture emerging opportunities.

Technology continues to transform the real estate landscape, offering new avenues for value creation and operational efficiency. From proptech solutions enhancing property management to blockchain-enabled transactions streamlining investment processes, embracing technological innovation can confer a competitive advantage in an increasingly digitized industry.

Moreover, sustainability considerations are gaining prominence as investors prioritise environmental, social, and governance (ESG) criteria in their decision-making processes. From green building certifications to sustainable development practices, integrating ESG principles into real estate investments not only aligns with broader societal goals but also enhances long-term value and resilience.

“The outlook for global property is becoming more positive and real estate investors are looking forward to a more positive 2024, with recovery predicted across key parts of the global property market but it’s imperative that stakeholders and investors have a keen understanding of the current challenges and the opportunities they present.

“By embracing innovation, sustainability, and strategic agility, real estate professionals can position themselves for success amidst uncertainty, laying the foundation for a resilient and prosperous future,” concludes Geffen.