Skip to main content

Another year of double-digit value falls in 2024

Persistent weak growth and elevated (albeit soon-to-be falling) interest rates continue to spell trouble for real estate values. We see NOI growth softening further over the next year as the industrial rent boom gives way to more “normal” growth rates and apartment rents flatline. At the same time, the adjustment in cap rates will continue to come through in appraisals, meaning that all-property capital values fall by 10% in 2024, after dropping 11% in 2023. Further ahead, the outlook for occupier markets is still strong in industrial and apartments, but both will remain overvalued in 2024 and will see further cap rises beyond, which will weigh on total returns. Instead, retail will be the bright spot, seeing average annual returns of 6% p.a. over 2024-28. Meanwhile, offices still face a substantial value adjustment, with another 20% fall to come in our view. What’s more, we still think it is likely to take two decades or more before office values regain their peak of Q1 2020.

Become a client to read more

This is premium content that requires an active Capital Economics subscription to view.

Already have an account?

You may already have access to this premium content as part of a paid subscription.

Sign in to read the content in full or get details of how you can access it

Register for free

Sign up for a free account to gain:

  • Unlock additional content
  • Register for Capital Economics events
  • Receive email updates and economist-curated newsletters
  • Request a free trial of our services

Get access