Amid a slower-growth environment overall globally, investors will focus on the relative outperformers. This relates to sectors, geographies and business models that are in the path of growth, whether structural or cyclical. Opportunities are emerging now in real estate’s growth sectors and will continue evolving through the next cycle.

Investors will continue to focus on sectors that are less mature across markets in terms of share of investment, such as logistics and living. And beyond that, key alternative sectors such as data centres and life sciences are on global investors’ roadmap. This reallocation will present an opportunity for diversified, stable income streams and higher returns.

Industrial & Logistics

Logistics will grow globally driven by structural and behavioural shifts in consumer patterns and increasing reliance on supply chains. Near-shoring and the need for domestic supply chain resilience will create further opportunities in more developed logistics markets: In North America with particular growth in manufacturing, in Europe driven by urban logistics, and in Asia-Pacific the continuing e-commerce boom amid urbanization and dense large population centres. The increasing importance and resilience of supply chains will impact all markets.

Living

The living sector is experiencing growth for many reasons. Global populations are growing and becoming more urban, meaning cities require more homes, with a broader range of household types and sizes needed. Innovative living solutions will provide some new supply to meet this demand. Further institutionalization of the sector will be driven by Japan, China and Australia in Asia-Pacific, and parts of Europe including the UK, France, Spain and Italy, where market maturity remains well below the current levels of the US and Canada. Capacity for institutional beds is high and supply is low, creating significant opportunity. Student housing and single-family rental will also be growth areas.