Forecast for 2024: Italian real estate market is number one among residential sites.

The year 2024 could be a year of recovery, according to economic analysts. Special attention among the investment themes of the year is paid to real estate, which, according to Savills forecasts, remains one of the "top choices".

Residential real estate is of particular interest

Characterized by a lack of supply with high demand. This situation will support high yields that are attractive to investors. Here are Savills' forecasts for 2024.

Increase in real estate yields in 2024

Real estate investors are optimistic about 2024, expecting a recovery in key segments of the global real estate market, as Savills points out. The outlook shows increased activity due to more attractive yields, rising prime rents and revised expectations of buyers and sellers. However, this broader picture includes significant regional and sectoral differences. Overall, investment activity is expected to moderately increase or remain flat across most real estate segments in Europe and the Middle East next year. Only a small fraction of experts forecast a decline in activity, so it seems that the worst of the interest rate hike is over.

Which real estate segments to invest in in 2024?

There is more optimism about activity in the residential real estate market, especially in apartment buildings, where demand exceeds supply in many regions.

At the same time, the logistics market also presents good prospects due to strong fundamentals. The commercial and office sectors evoke mixed views, especially outside the flagship sector, where 16% of respondents predict a decline in investment activity over the next year. Overall, between 5% and 10% of respondents predict strong growth in investment activity, and the main factors in this growth will be quality purchases and opportunities to invest in properties in a difficult market.

Offices

In particular, experts surveyed by Savills expect yields to rise in the quality office sector in many major global cities, including New York, Sydney, Shanghai, Mumbai, Paris, Frankfurt and Dubai. However, with interest rates reaching peak levels and a more positive outlook for investment activity, yields are expected to gradually stabilize following these changes.

Logistics and production

Upward yield pressure is also expected to exist in all logistics and manufacturing centers in the U.S., Asia and Europe, with the exception of Dubai, Singapore and Tokyo, which will continue to offer investors reliable returns. After several years of difficulties, recovery is expected to be a gradual process with acceleration in the second half of 2024. There is agreement that the recovery in global investment will occur in the third quarter and will be pushed by several key markets, including the US and the UK.

Italian residential real estate among the best options

The sectors of quality hotel and commercial real estate in tourist destinations in Southern Europe, Singapore, and Australia, as well as residential sectors in cities in Japan, Singapore, Germany, Spain, Italy, and the UK, present high prospects, where supply does not meet the growing demand for rental housing. One of the key strategies for creating additional value is converting office or commercial spaces into residential ones to achieve higher rental yields.