Residential blocks in Warsaw, Poland
Busà Photography|Moment|Getty Images
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Due to widespread economic uncertainty, there are new indications that activity is moving again after commercial real estate activities were plucked out earlier this year.
According to JLL’s Global Bid Stensity Index, capital is growing and “bidder dynamics” is stable, according to the Global Bid Stensity Index, which was improved in July.
The index measures bidding activity to give real-time views on liquidity and competitiveness in private real estate capital markets. This is an indicator of future capital flows across investment sales transactions.
It consists of three subindexes.
Bid spread: Final winning and asking price bid transaction per transaction: Changes in average number of bids per transaction: Changes in price setting for the final bid
The report shows that stabilizing bid dynamics is generally maintained as the basis for performance in the real estate sector and despite weak investor sentiment, it has been held steady to date.
“Without a lack of liquidity, institutional investors are returning to the market with more capital sources and a new appetite for real estate,” said Ben Breslau, JLL’s Chief Research Officer. “After eased earlier this year, further recovery is expected to be in stages, but we expect momentum to increase until the second half of this year, as borrowing costs and real estate values remain stable in most markets.”
The widening of bids, the difference between the highest price that buyers willingly pay for their assets and the lowest price that sellers are willing to accept, narrows to a healthier level across multiple sectors. The sector that sees the most improvement is what is called “Living.” This includes primarily multi-family apartments, but also senior living and student housing.
Retailing has done better than last year, but has declined over the last few months as tariffs have become heavier and heavier in the sector. Industry is the biggest laguard. Muddy by potential and real tariffs thanks to supply chain uncertainty.
The dynamics of office bidding show improvements driven by bidders citing office loans and more lenders. Some people have called the bottom of the office market after a COVID-induced crash. Investors hunt bargains in some cases, but as more offices strengthen, overall trading demand is increasing.
Conclusion: According to the JLL report, investors seem to embrace uncertainty as a new normal. Breslau said it involves accepting higher risks.
“The appeal of CRE investments as a long-term storehouse of value remains unchanged. We expect this to lead to continued growth in capital flows as more investors move into a ‘risk-on’ mode, coupled with a very strong debt market,” he said.
Revised: This article has been updated to revise a reference to Ben Breslau, Chief Research Officer at JLL.
