Investment Outlook for 2024

After effects of the economic storm

What’s the Point?

As the year-ends, 2024 economic viewpoints vary. Our view is the investment picture will become clearer and conditions will likely start to improve in 2024. While the storm will yield to signs of recovery, be prepared for a longer season of volatility. Our 2024 Global Investment Outlook report can help arm you with investment perspectives and data to understand the current landscape and plan for the future effectively.

Just as the JPMorgan Chase CEO stated, the world should brace itself for the possibility of an economic hurricane. We believe the storm started in March 2020 as global lockdowns took root. Powerful winds blew open all fragilities in the global equilibrium, revealing weaknesses in supply chains, geopolitics, institutional trust, and more. However, after a little over 18 months, it seems that the storm is finally receding, giving us an opportunity to assess the damage and plan for the future.

As we look out on the economic landscape, there are crucial lessons to be learned and trends to watch. For instance, the post-pandemic real estate surge can be traced back to an abundance of available capital. In the absence of alternatives, even the diminishing capitalization rates appeared attractive. A staggering $3.1 trillion was transacted from Q4 2020 through mid-year 2022, and over $840 billion refinanced in the U.S alone.

The transparency of the securitized markets can provide can provide valuable insights here. After the pandemic lockdowns ended, aggressive two-year floating-rate securitized instruments were widely used. As property values fell and rent growth slowed, some owners have found themselves facing mounting problems.

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Moreover, the bid-ask gap remains notably wide despite narrowing in some segments. Interestingly, transaction volumes over the last few quarters have been relatively low compared to pre-pandemic standards.

Looking into the macro trends, inflation rates have decreased globally, supply chain pressures have eased considerably, and markets are expecting higher long-term rates. However, there are vulnerabilities in the U.S labor market that we must keep an eye on. And, a decrease in the global money supply could potentially impact bank lending trends.

Despite these mixed signals, there are some glimmers of optimism. Bond market volatility has decreased significantly, indicating that markets may be emerging from the reset.

Finally, we must remember that while we can't control the winds of change, we can adjust our sails. In order to stay ahead of the curve, it's essential to understand the current landscape and plan for the future accordingly.

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The content herein and in the report is provided for informational purposes only. Nothing above or in the report constitutes investment, legal, or tax advice or recommendations. Such content should not be relied upon as a basis for making an investment decision and is not an offer of advisory services or an offer to invest in any product or asset class. It should not be assumed that any investment in an asset class described herein will be profitable. Any projections, estimates, forecasts, targets, prospects and/or opinions expressed in these materials are subject to change without notice. Opinions or beliefs expressed in these materials may differ or be contrary to opinions expressed by others. Certain information above and in the report has been obtained from third-party sources. Hines has not independently verified such information.