Reflections on this year’s inflection points for real estate

The Savills Blog

Reflections on this year’s inflection points for real estate

As we move closer to 2025, December provides an opportunity to reflect on the past year. 

The theme of our 2024 Impacts programme was inflection, positing that this year could mark a turning point in global property markets. We foresaw a confluence of market drivers that would affect fundamental change in real estate across the globe.

In many respects 2024 has delivered on this promise, and we’ve seen notable geopolitical, economic, and technological inflections.

Electoral upheaval

A record number of people globally had the opportunity to vote in democratic elections this year; around half of the world’s population across over 70 countries. These showed a strong anti-incumbent sentiment, and even in nations that opted to re-elect ruling parties, such as in India, they did so with much smaller mandates resulting in a greater need for collation building. This inflection in politics has consequences for global property markets, as many of the newly empowered political parties look to affect change.  The affordability of residential real estate has been top of the agenda for many, as has nearshoring industry and business in the wake of wider geopolitical tensions.

Loosened liquidity

Across the world central banks have begun to lower interest rates, such as in the United States where the Fed funds target rate has fallen from 5.5% to 4.75% this year. This marks yet another inflection point, with further rate cuts expected going forward as inflation continues to soften. While this has a wide range of effects, for property markets a key outcome is that cheaper access to debt will likely support development spending and investment activity in the sector, gradually aiding undersupplied housing markets as well as building new prime office space or large logistics areas. Lower rates have also led to the stabilisation of real estate transaction volumes, setting investment markets up for a more sustained recovery next year.

AI shaping real estate

Technology is an aspect of our modern life that is continually evolving, but in 2024 the rise of generative AI caused an inflection point as the new tool shakes up real estate. This rapid growth has also resulted in ever increasing demand for data centres and, subsequently, electricity. Companies across the world are racing to locations that offer reliable and affordable energy in order to build large, dedicated, hyperscale data centres to help drive the next generation of the technology. Securing talent, especially skilled AI engineers, is a top priority for many businesses across all sectors, and this has continued to drive the flight to quality in both office and industrial space as employers seek to attract and retain this talent with high quality workplace offerings.

It is fair to say that 2024 has been a moment of inflection for global property markets, one that has set the groundwork for further positive changes for real estate in the new year.

 

Further information

Contact Connor Chilton

IMPACTS: Adjusting to a new world order

 

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