What Will Boost S-REIT Recovery in 2025
Monday, Jan 13, 2025 7:59 pm ET
1min read As the global economy continues to navigate through the challenges posed by geopolitical tensions, rising trade tensions, and elevated borrowing costs, the outlook for S-REITs in 2025 remains uncertain. However, several key economic indicators and trends could boost the recovery of S-REITs in the coming years.
1. Global GDP Growth: The global economy is projected to remain resilient, with global GDP growth of 3.3% in 2025. This growth will likely boost demand for commercial real estate, benefiting S-REITs. (OECD Economic Outlook, 2025)
2. Inflation: Inflation is expected to ease further, from 5.4% in 2024 to 3.8% in 2025, supported by the still restrictive stance of monetary policy in most countries. Lower inflation can lead to increased consumer spending and business investment, which can drive demand for retail and office spaces, respectively. (OECD Economic Outlook, 2025)
3. Unemployment and Real Household Incomes: Unemployment remains low by historical standards, and real household incomes have been bolstered by strong nominal wage gains and continued disinflation. Lower unemployment and higher real incomes can lead to increased consumer spending, benefiting retail S-REITs. (OECD Economic Outlook, 2025)
4. Trade Volumes: Global trade volumes are recovering, with a projected increase of 3.6% in 2024. Increased trade can lead to higher demand for logistics and industrial spaces, benefiting S-REITs in these sectors. (OECD Economic Outlook, 2025)
5. Regional GDP Growth: GDP growth in the United States is projected to be 2.8% in 2025, while the euro area is projected at 1.3% in 2025. Strong economic growth in these regions can drive demand for commercial real estate, benefiting S-REITs. (OECD Economic Outlook, 2025)
In conclusion, while the outlook for S-REITs in 2025 remains uncertain, several key economic indicators and trends could boost the recovery of S-REITs in the coming years. These include global GDP growth, inflation, unemployment and real household incomes, trade volumes, and regional GDP growth. As the global economy continues to navigate through the challenges posed by geopolitical tensions, rising trade tensions, and elevated borrowing costs, S-REITs will need to adapt and innovate to capitalize on these opportunities.
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