US to outperform in 2022 before rate rises curb returns

The rapid bounce-back in the US economy along with still-loose monetary policy will drive continued strong performance in real estate in 2022, when we expect returns to exceed 12%. That would see the US outperform the UK and euro-zone by 5%-pts and 3%-pts respectively. We then expect returns to fall back to around 5% in 2023, roughly matching the other two markets. But with interest rate rises likely to impact US valuations sooner, we forecast the US to underperform by 1.5%-2%-pts p.a. in 2024-26. In view of the wider interest, we are also sending this US Commercial Property Update to clients of our European and UK Commercial Property Services. Note: Central Bank Drop-In – The Fed, ECB and BoE are just some of the key central bank decisions expected in this packed week of meetings. Neil Shearing and a special panel of our chief economists will sift through the outcomes on Thursday, 16th December at 11:00 ET/16:00 GMT and discuss the monetary policy outlook for 2022.