Deals Activity: Moderate
Restructuring Activity: High
Deals activity in Real Estate
1. Deal volumes have increased steadily in recent quarters as the economy emerged from the pandemic.
2. A notable slowdown in Q3 2022 may reflect challenges ahead as national and international economic volatility hits fundamentals underpinning the real estate market.
3. We anticipate deal activity will remain subdued while economic volatility is elevated.
Restructuring activity in Real Estate
Historically low interest rates and high demand for new space has supported a strong recovery from the pandemic. Commercial space, especially retail and leisure sites, remains difficult to occupy but demand for high-quality office and residential space demonstrates strong market fundamentals. The underlying 'flight to quality' has placed pressure on owners and managers of secondary and/or underinvested sites, whether in retail, office or industrial, to make material investments or divestments. This, in turn, has led to a number of sizeable real estate transactions.
Uncertainty surrounding immediate sector prospects remains as borrowing costs rise. Financing for new developments, especially more speculative ones, may prove harder to come by, resulting in the pausing, cancelling or downsizing of certain projects.