Global Macro and Real Estate Monthly
Zoltan. Szelyes, CFA, CAIA
CEO Macro Real Estate: Independent research and strategy consulting | Indirect real estate mandates
We have launched the the Global Macro and Real Estate Monthly, a subscriber based monthly publication. Here on linkedin we show some highlights of it. People interested in the Macro Real Estate premium subscription should contact [email protected]
The Global Macro and Real Estate Monthly
We would like to welcome you to the first edition of Global Macro and Real Estate Monthly (GMRE).
In this publication, we aim to place the development of international real estate markets in a global context monthly.
This is a revival of a previously very successful publication that Zoltan created at a major Swiss bank before the financial crisis. It has been adapted to the changed environment.
The publication has a hybrid format, meaning it is a combination of a narrative report and a presentation. There will also be an accompanying podcast/video. The charts are labeled in English, but there will be both a German and an English version.
It will cover the following areas:
What is your benefit?
Do you manage international real estate portfolios or are you a multi-asset class investor? If so, this provides you with access to specialist knowledge.
Over the past 20 years, Zoltan has focused on Swiss and international real estate investments from a macro perspective.
In addition to updates and risk highlights, you can use the Private Real Estate Asset Allocation section to challenge your investment managers (including for multi-manager investors).
Even for private investors, it can be worthwhile to check in regularly and gather ideas. When investing personal funds, typically 10%-20% is allocated to (mainly listed) real estate investments, which are rarely covered in public discussions.
There are many financial blogs, but this is the first service focused on real estate investments combining public and private markets. It is created by specialists who work daily with international real estate markets and have invested, and continue to invest, capital in this area.
Macro Assessment
The year 2025 is only about six weeks old, but it has not been short on events.
The year began with rather nervous bond markets. The upward trend in 10-year bonds, particularly for U.S. and U.K. government bonds, continued. This was driven by refinancing concerns and deficit-driven economies, especially in the U.K. and the U.S. However, in the EU, countries like France are also in focus.
This upward trend was further fueled by stronger economic expectations in the U.S. and fears of inflationary effects stemming from the Trump presidency.
On January 14, U.S. government bonds reached a temporary peak of around 4.8%. Since then, fortunately, there has been some easing, and yields are now 30 basis points lower.
For real estate investors, it will be important for the interest rate situation to ease in 2025, as several refinancing events are on the horizon. Some mortgages fixed at low rates in 2020 and 2021 are due for refinancing this year.
The easing in bond markets was not only supported by lower-than-expected inflation in the U.K. and the U.S. but also by various interest rate cuts by European central banks. It is worth noting that inflation in the Eurozone surprised to the upside.
Nevertheless, the ECB, the Swedish Riksbank, and the Bank of England have all cut interest rates.
The inauguration of Donald Trump was also highly anticipated. In our assessment, he has so far delivered on what was expected of him. He announced tariffs against Canada, Mexico, and China. However, after the first two countries promptly responded with border security measures, he temporarily withdrew the tariffs.
China reacted with cautious countermeasures, and it remains to be seen whether there will be any easing in this situation. However, we believe that these tariffs are not a bluff by President Trump but part of his longer-term strategy to bring jobs back to the U.S. The next steps could target Europe. As such, the U.S. president remains a factor that can repeatedly surprise investors on various fronts.
The second political event is the German elections, which are scheduled for the end of February. A CDU victory could provide a much-needed boost in sentiment, provided a stable coalition is formed.
Overall, despite all the noise, the environment in the first weeks of the year has been remarkably favorable for real estate markets, as evidenced by the positive performance of publicly listed vehicles.
We believe that, despite potential shock moments, the macroeconomic situation is likely to remain constructive for the recovery of direct real estate markets. While the economy remains subdued, the recovery trend has begun and is likely to be further supported by lower interest rates.
Real estate market assessment and strategy
The global real estate markets have had a positive start to the year. Much of our observations regarding real estate markets are still based on Q4 2024 data due to publication lags. Listed real estate markets that are more forward looking have showed a very promising stark of the year.
We have indications that we can paint an optimistic picture for 2025. Interestingly, despite the rise in long-term yields, many real estate indicators showed improvements in Q4 2024.
The Q4 2024 data on transaction volumes finally reflects a strong fourth quarter. Due to seasonality, the pressure to close deals by year-end, and the fact that portfolios are often valued on an annual basis during this quarter, Q4 is typically the most significant quarter of the year.
Compared to Q4 2023 and the previous quarter, we see a clear global improvement. Key markets such as the U.S., the U.K., and Germany show growth of 40% to 60%. Nevertheless, this should only be seen as a starting point. In many countries, transaction volumes remain significantly below 2021 levels.
In transaction markets, we also see some evidence that net yields have peaked. However, we expect only a slight decline in 2025.
The ongoing issue is that many investors are still holding legacy assets whose external valuations have yet to be adjusted to reflect reality. Additionally, capital raising in 2024 was the weakest in years.
We expect capital raising to regain some strength this year.
The indices for valuations of indirect investment products have so far only been published in the U.S., but our discussions with investment managers and fund information make us optimistic that Q4 2024 was globally positive for indirect core investments.
In our Private Real Estate Asset Allocation, we present our views on how we would allocate capital. We recommend overweighting Europe, contrary to many multi-manager portfolios that have a strong overweight in the U.S.
Many investors are still underweight in retail properties. We see renewed value in this sector and are positioning slightly higher.
Since 2021, we have been strong advocates of overweighting hotel properties, and we continue to recommend further overweights in this area.
We would suggest underweighting life sciences, particularly in the U.S., and office properties. The primary reason lies in the capital markets, as some investors remain heavily overweight in office properties. This does not mean there are no opportunities in this sector, but caution is warranted.
We are currently conducting a detailed analysis of data centers, including a deep dive into their potential, and we will publish a special analysis on this topic next month.
Next months also more data will be out on European and APAC yields and returns. So it’s worth staying with us.
Disclaimer
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Data Sources
Data used in this report are sourced from Company data, real estate brokers, Bloomberg, and Macro Real Estate estimates. When used, additional data sources are indicated.
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It's a climb—just keep pushing. Developing data-driven investor platform ??
2 周super cool! Zoltan. Szelyes, CFA, CAIA do you also have data avalible for Denmark? Copenhagen in particular.
Top! Bin dabei