Rents and Capital Values Remain Buoyant Despite Global Trade Tensions – The Property Chronicle
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Rents and Capital Values Remain Buoyant Despite Global Trade Tensions Despite trade uncertainties, income growth and capital appreciation kept up the positive momentum

The Economist

Despite global trade tensions, the global economy reached an estimated growth rate of 3.8% in the first half of 2018, the fastest since 2011, driven by growing consumer spending and massive fiscal stimulus enacted in the U.S. We might even argue that trade tensions have been good for the global economy, pushing China into additional economic stimulus. 

Nevertheless, in the area of trade relations, the repositioning of the U.S. continues. Tensions between the U.S. and EU have eased but continued to rise between the U.S. and China. Prospects brightened on regional trade agreements such as NAFTA (at least with Mexico) and a potential APAC deal later this year. 

Despite trade uncertainties, income growth and capital appreciation in real estate generally kept up the positive momentum in line with positive economic growth. CBRE’s rent and capital value indices recorded year-over-year growth across all property types and all regions in Q2 2018, an all-around growth the market hasn’t seen since Q1 2016. Quarter-over-quarter growth prevailed in office and industrial sectors, while retail rent and capital value dropped in EMEA slightly.

The spread of real estate prime yields and government bond rates continues to narrow slowly. Capital growth has been resistant against the near-term pressure from rising interest rates. Income growth has increasingly become the return driver, particularly in the APAC office and industrial sectors.

Source: CBRE Research, Q2 2018.

The Economist

About Richard Barkham

Richard Barkham

Richard is a specialist in macro and real estate economics. He joined CBRE in 2014 as Executive Director and Global Chief Economist. Prior to taking up his position with CBRE Richard was a Director of Research for the Grosvenor Group an international business with circa $10bn of capital under management in real estate. He was also a non-Executive Director of Grosvenor Fund Management where he was involved in fund strategy, risk analysis and capital raising. Richard is the author of two books and numerous academic and industry papers. In 2012 he published Real Estate and Globalisation (Wiley Blackwell, Oxford), which explains the impact on real estate markets of the rise of emerging markets such as China and Brazil. He has extensive consulting experience and is a Visiting Professor in the Department of Construction and Project Management at the Bartlett School, University College London. He holds a PhD in economics from the University of Reading where he taught, in the Departments of Economics and Land Management, between the years of 1987 and 1998.​​​

Articles by Richard Barkham

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