Originally published on March 21, 2023, by ULI Staff for UrbanLand Magazine.

Emerging Trends in Real Estate^® Global Outlook 2023 sets out global real estate sector leaders’ expectations for the year ahead. The report from ULI and PwC is a key indicator of sentiment in global real estate and investment and development trends across the globe.

According to global industry leaders, the economic outlook for real estate contains major areas of uncertainty driven by ongoing increases in interest rates and lack of debt and equity capital available, resulting in low liquidity, concerns about refinancing of existing loans and a ‘wait and see’ mode across the industry. A key question is whether rental growth can be delivered against a background of stagnant economies, declining consumer sentiment, ongoing structural change and increasing capex requirements.

The full consequences of central banks’ monetary tightening and rising interest rates have still to play out, but the rush of withdrawals from private open-ended funds by institutional and retail investors has troubled real estate leaders. For institutional investors, the withdrawal is partly a response to the “denominator effect,” but these funds represent a relatively liquid investment, and the rush to the exit is evidence of investor concerns.

The biggest obstacle to getting deals done in 2023 is uncertainty over where and when interest rates will settle, following which more clarity will appear on real estate pricing. With the general expectation that interest rates will stay higher for longer, the current price discovery challenge—amounting for some to a “phoney war” between buyers and sellers—is exacerbated by low investment volumes and low liquidity. Logistics seems to have largely re-priced in major markets and hope that long-standing structural ch