Global Real Estate Perspective, May 2025

The global economic narrative in 2025 has been dominated by an evolving geopolitical and trade policy environment. While real estate markets were generally resilient during the first quarter, an atmosphere of unpredictability has weighed on business confidence and put renewed focus on supply chains. Most major markets are expected to see positive growth this year, but the outlook is dynamic and depends on U.S. trade policy and the trade, fiscal and monetary response from across the rest of the world.

Occupier activity in Q1 was mixed, with varied performance across markets and property types. Many industrial and retail tenants are reviewing the impact of new tariffs on their supply chains and operations. At the same time, global office leasing continued to recover, with all three regions recording an increase in activity from Q1 2024.

Concerns surrounding the economic impact of recent tariffs are resulting in a change in sentiment for investors, ushering in a renewed period of unpredictability. While the investment community has come to expect volatility and has been operating during periods of heightened uncertainty over the past five years, each new market inflection point causes an initial disturbance, followed by a period where investors need to evaluate impact on their investments and capital deployment strategy.

It should be noted that the commercial real estate sector has entered this period of volatility in a relatively healthy state. The protracted asset value resets during the past 2.5 years have effectively de-risked the asset class, and the sector’s relative value vis-a-vis public market investment alternatives also presents a favourable backdrop. Debt and credit levels across the globe are healthy, with liquid debt markets supporting capital markets activity. And the performance of existing assets will benefit from waning supply pipelines in many mature markets. Although signs of plateauing are beginning to emerge, asset values have generally held steady and bidding intensity was active at the start of the year.