Sponsored: Seizing Opportunities in a Changing Real Estate Market

By David Steinbach, global chief investment officer, Hines

As we transition into 2025, the global real estate market stands at a pivotal juncture. An era characterized by unusually low interest rates, which fueled growth and facilitated easy leverage, has concluded. We now find ourselves in a sustained higher interest rate environment, necessitating a strategic focus on alpha generation. This shift presents a unique opportunity for investors to deploy capital and strategically reposition their portfolios.

As central banks begin cutting interest rates, markets are seeing improved fundamentals, increased capital flow, and stronger global growth. Demographic shifts and the rise of AI are also helping to shape our optimistic investment outlook. As a new era of recovery emerges, several sectors are poised to offer compelling opportunities.

Living: With acute housing shortages and shifting demographics, the living sector is primed for growth. Households in developed markets are increasingly favoring renting over buying, a trend reinforced by elevated mortgage rates and an estimated global housing shortage.

Retail: After years of transformation, the retail sector is set for continued growth. In the United States, retail has led in total returns across major property types for each of the past eight quarters through Q3 2024. Strong consumer sentiment and wage growth further bolster the appeal of open-air, grocery-anchored retail formats.

Industrial: Despite softening fundamentals post-pandemic, the capital markets have remained bullish on the industrial sector. As such, it remains fairly, if not fully priced. This is particularly true for assets with short-term rollovers of seasoned leases, where buyers can underwrite large net operating income gains on expiring leases given accrued market rent growth.

Office and Alternatives: Return-to-work trends and opportunities in niche sectors, including student housing and digital infrastructure, present favorable prospects for tactical investments. Recent data indicates that office fundamentals are no longer weakening in most U.S. markets, with positive net absorption observed for the first time in several years.

As we embark on this new chapter, it is imperative for investors to adopt a strategic and methodical approach, capitalizing on the evolving dynamics of the real estate landscape. The convergence of improving fundamentals, increased capital inflows, and global growth signals a promising environment on the horizon for those poised to seize the moment.

For a comprehensive analysis, I encourage you to review our 2025 Global Investment Outlook report, A New Dawn: Seizing Real Estate’s Moment of Opportunity, to learn more about what opportunities lie ahead in 2025.

The content herein is provided for informational purposes only. Nothing herein constitutes investment, legal, or tax advice or recommendations. This information represents subjective opinions of Hines. Other market participants may reasonably have differing opinions.

David Steinbach is responsible for directing Hines’ global investment strategy. He shapes the strategic direction and long-term vision of the organization and allocation of capital. He is also co-head of the investment management business where he serves as a fiduciary for the company’s limited partner investors. He is a member of the firm’s executive committee and investment committee. Since joining Hines in 1999, he has been involved in billions of dollars of acquisitions and asset management globally, successfully navigated through several real estate cycles, and championed numerous innovation and sustainability initiatives within the firm. Over his tenure, which began in 2003, Hines has raised over $41.39 billion in capital across all global funds and grown from $10 billion to over $93 billion AUM as of June 30, 2024. Steinbach volunteers for Houston Welcomes Refugees and is the chairman of the Board of Veritas Academy of Houston. He divides his time between the company’s Houston headquarters and London office and received his bachelor’s and master’s degrees from Texas A&M University.

Hines is a leading global real estate investment manager. The company owns and operates $93.2 billion of assets (including both the global Hines organization and registered investment adviser assets under management as of June 30, 2024) across property types and on behalf of a diverse group of institutional and private wealth clients. Every day, Hines’ 5,000 employees in 30 countries draw on the company’s 65-year history to build the world forward by investing in, developing, and managing some of the world’s best real estate. To learn more, visit www.hines.com and follow @Hines on social media.

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