Global economic growth is set to slow down this year despite interest rates decreasing, according to the latest report from Knight Frank. The global gross domestic product (GDP) is expected to see a modest 2.9% increase in 2024, a decrease from 3.1% in 2023.
The real estate consultancy highlighted that higher interest rates will continue to restrict spending and hinder growth as American consumers have depleted their Covid-era savings. Governments are also facing challenges due to high levels of debt accumulated during the pandemic.
Knight Frank anticipates a decline in interest rates this year, but uncertainties remain amidst demographic shifts, the green agenda, and efforts to reduce dependence on Chinese supply chains. These transformations will require substantial public and private investments, potentially leading to higher prices of raw materials, infrastructure, and labor.
Despite challenges, the real estate sector is poised for transformation. Lower property values, reduced interest rates, and forced selling of assets following market corrections in recent years are expected to drive increased investment volumes. The report suggests a shift in demand for properties in low-risk areas and energy-efficient buildings due to rising insurance premiums related to climate change.
Artificial intelligence is also poised to revolutionize the real estate market, with increased demand for specialized properties such as data centers, collaborative research spaces, and AI-focused industrial estates. Improved building management systems driven by AI technologies aim to enhance energy efficiency, climate control, and security standards in properties.
Investors who overlook environmental factors in their real estate portfolios may face increased risks, while opportunities are emerging for properties adapted to climate-related challenges. The demand for technology that aids property owners in mitigating climate hazards and recovering from damages is on the rise.
Overall, the global economic landscape is evolving, with real estate markets undergoing significant changes driven by technological advancements and environmental considerations. Investors and property owners are urged to adapt to these shifts to navigate the evolving real estate ecosystem effectively.
