Prices are set to subside as investors rethink their portfolios
regarded as a good hedge against inflation. Landlords’ ability to increase rents can cushion the blow from rising costs. Ifis driven by strong economic growth, rents go up, buildings stay full and landlords are assured of rising income.
The darkening mood is in contrast to the optimism of 2021, when returns soared, rents rocketed and fundraising, fuelled by low interest rates, raced to record highs. Even as offices remained eerily empty, fund managers rushed to park their capital in new blocks of flats, labs and warehouses, pushing up the global value of professionally managed property by nearly $1trn. That stellar performance has since fizzled out.
Not all properties will struggle. The highest-quality, most energy-efficient buildings with modern amenities in prime locations, typically owned by big institutional investors, are expected to fare relatively well. By contrast, lower-quality assets across Europe lost around a tenth of their value in the second quarter of this year, compared with the previous quarter, according to Green Street, a research firm.
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