The World Economic Forum thinks 2025 will be a year of recovery following a challenging, high-interest-rate environment that has required an increasingly strategic approach to investing. WEF outlined six reasons for its optimism.
At the top of the list is an emerging buy cycle. WEF referenced a Hines Research report that found two-thirds of global markets were in some phase of a buying cycle, as of Q3 2024. That is the highest level since 2016 and mirrors the early years of the post-global financial crisis recovery and the mid-1990s when the US emerged from the savings and loans crisis, said WEF.
“While both periods had challenges, they were excellent vintages to put money to work,” said WEF.
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In addition, the forum said its analysis, based on data from around the world, indicated the rental market is gaining traction worldwide. A housing shortage of about 6.5 million units for 14 major developed economies coupled with a significant lack of housing affordability worldwide, will make the global living sector a strong play this year as households have shown a clear momentum for renting over buying, the report said.
Meanwhile, the retail sector experienced a more balanced market with limited new supply and the process of sorting out the winners and losers have played out. The US retail sector has ranked first in total returns across the four major property types in each of the past eight quarters, said WEF. And retail has the second-highest percentage of markets in some phases of the buying cycle across the globe.
The industrial sector remains attractive despite moderating fundamentals, due to net operating income (NOI) growth, the forum said. It predicts renewed rent growth as supply and demand continue to more closely align in 2025.
Within the office sector, regional variances persist, but dislocation in the US office capital markets has created opportunities across the capital stack, said WEF.
“As existing loans mature, the lack of traditional financing needed to meet financing requirements has created a situation where debt may be more attractive than equity,” said the analysis.
Finally, WEF pointed to opportunities in niche sectors that vary significantly across regions. Student housing, self storage and data centers are building strength due to unique demand drivers, the report said.
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
