Real estate transaction volume in 2021 is expected to grow to $515 billion, up 13.7% from the $453 billion in 2020, which was the lowest since 2013, according to the latest Urban Land Institute and PwC US' Emerging Trends in Real Estate report.
Transaction volume is expected to bump up to $600 billion in 2022 and remain at that level in 2023.
The report reflects the findings of ULI's semi-annual real estate forecast based on the opinions of 40 economists and industry analysts.
Equity real estate investment trusts are expected to earn an annual 27.8% return in 2021, the highest since 2013 when they returned 30.1%, and a sharp recovery from the -8% return in 2020. However, forecasters expect equity REIT returns to settle down to 10% in 2022 and stay at 10% in 2023.
Private real estate is expected to earn an annual 8% return in 2021 but dip to 7% in both 2022 and 2023. Of the four main property sectors, industrial is expected to produce the highest annual returns over the next three years, earning an annual16% this year, 11.5% in 2022 and 10% in 2023. Apartments are forecast to return 7.5% in 2021, 7.8% in 2022 and 7% in 2023.
Office and retail returns are expected to grow over the next three years. Office is expected to return 4% in 2021, 4.4% in 2022 and 5% in 2023. At the same time, forecasters expect office vacancy rates to increase to 16.9% in 2021 vs. 14.9% in 2020. In 2022, office vacancy rates are anticipated to remain at 16.9% and then dip to 16.4% in 2023.
Retail is expected to earn 2% in 2021, 3.5% in 2022 and 4.3% in 2023.
Eighty-two percent of respondents indicated that they consider environmental, social and governance factors when making investment and operational decisions.
