1、2024 GLOBAL OUTLOOKMAY 2024INVESTMENT RESEARCHFor Professional and Institutional Investors only.All investments involve risk,including the possible loss of capital.Constructing a new portfolio for the next cycle2024 GLOBAL OUTLOOKKey Takeaways:2024 is all about CHANGING THE NARRATIVE around global r

2、eal estate and the way investment portfolios are constructed.When it comes to building a RESILIENT GROWTH-DRIVEN portfolio,city and local market dynamics matter.3Investment themes are driven by ongoing STRUCTURAL trends and TACTICAL opportunities from a dislocated market.2As returns turn a corner,20

3、24 represents a COMPELLING ENTRY POINT across the risk spectrum.1PART III PART IIPORTOLIO CONSTRUCTIONGLOBAL OVERVIEWPART I KEY INVESTMENT THEMESPGIM Real Estate|May 2024|REF:013208 Page 4 2024 GLOBAL OUTLOOK0%1%2%3%4%5%6%7%0002040608022242628Net Initial Yield10-Year Government Bond Yield

4、Target Acquisition Yield and RangeGlobal yields have corrected signifcantly and are close to our target rangeSeveral key factors give us conviction that global real estate markets are approaching a turning point:Looser monetary conditions.As a capital-intensive industry,a reduction in borrowing cost

5、s via lower interest rates is set to ease the strain on investors.Historical precedent.Values have started to turn a corner the pattern is consistent with past cycles,pointing to a stabilization this year and return to growth in 2025.The repricing is nearly done.Based on our modeling,most of the eff

6、ect of past interest rate increases has now been factored in.Yields are already very close to our target acquisition range.Low supply,solid occupier markets.Despite recession risks,occupier strains have been limited by ongoing jobs growth resilience and low development activity.Rental growth remains

7、 resilient.PART I GLOBAL OVERVIEWOn the back of easing monetary conditions and improving investment market liquidity,global real estate values are reaching a turning point in 2024THE NARRATIVE IS CHANGING:GLOBAL MARKETS ARE AT A TURNING POINT6-MONTH CHANGE IN REAL GLOBAL ALL PROPERTY PRIME/GRADE A C

8、APITAL VALUES(%)GLOBAL ALL PROPERTY PRIME/GRADE A NET INITIAL YIELD(%)QUARTERLY GLOBAL ALL PROPERTY PRIME/GRADE A YIELD SHIFT Sources:CoStar,Cushman&Wakefield,JLL,PMA,PGIM Real Estate.As of May 2024.Quarters From Peak-8%-6%-4%-2%0%2%4%6%-16-12-8-4048121620Current CycleAverage Past CyclesTe pace

9、of decline in real values is slowing history says values should start to stabilize in mid to late 2024Sources:CoStar,Cushman&Wakefield,JLL,PMA,PGIM Real Estate.As of May 2024.-25%0%25%50%75%100%-22222323%correction achieved(RHS)to reach target acquisition rangeQuarterly yield shift(ba

10、sis points)Sector and market stories difer,but,in aggregate,prime all property yields are fast approaching a target range that we deem to be attractive for long-term buy and hold investingSources:CoStar,Cushman&Wakefield,JLL,PMA,PGIM Real Estate.As of May 2024.PGIM Real Estate|May 2024|REF:01320

11、8 Page 5 2024 GLOBAL OUTLOOKAs the trough approaches,history suggests the next few years will offer attractive investment returnsSIGNS ARE THAT 2024&2025 ARE GOING TO BE AN ATTRACTIVE VINTAGEOur view is that global values will hit a trough in the middle of 2024.Using past downturns and recoverie

12、s as a guide,it is optimal for equity investors with longer-term strategies to deploy capital at or even just before the turning point,which reduces the probability of exiting investments in a future downturn.However,the expectation that capital growth will accelerate in an upswing means that strate

13、gies with shorter time horizons can expect to deliver their cyclically highest returns between 2025 and 2027.This period will be particularly attractive for value-add strategies focused on shorter-term asset repositioning,for example.A note of caution though:its all about balancing risk and return.W

14、hile it looks like global values are approaching a turning point,if there is another negative shock,there is a risk of lower returns from deploying today.This speaks to balancing between equity and debt exposure with the latter offering much stronger protection against these inherent timing risks.AN

15、NUALIZED FORWARD-LOOKING GLOBAL ALL PROPERTY PRIME CAPITAL VALUE GROWTH BY INVESTMENT TIME HORIZON AVERAGE OF PAST CYCLES(%)AVERAGE OF PAST CYCLES:OPTIMAL DEPLOYMENT POINT BY INVESTMENT TIME HORIZONRANGE OF RECORDED 5-YEAR AHEAD CAPITAL GROWTH BY STAGE OF THE CYCLE(%P.A.)-10%-8%-6%-4%-2%0%2%4%6%8%10

16、%-12-8-4048121-Quarter Investment Period1 Year3 Years5 YearsQuarters From TroughFor investments with longer time horizons(e.g.5 years+),history suggests the highest returns will be achieved by deploying capital at or just before the value trough which we expect in mid-2024Investments with shorter ti

17、me horizons(e.g.1-3 years)will typically beneft from stronger capital growth once a post-trough upswing is established202720262H251H252H24048121Y2Y3Y4Y5YIndicative optimal investment timing for a global portfolio for diferent investment time horizonsQuarters From Trough-2%0%2%4%6%8%10%12%TroughEarly

18、UpswingPeakDownturnRangeAverageInvesting earlier in the cycle increases growth potential and reduces the probability of capital lossesHighest return,lowest probability of capital lossExpected trough:mid-2024Source:PGIM Real Estate.As of May 2024.Forecasts are not guaranteed and may not be a reliable

19、 indicator of future results.Source:PGIM Real Estate.As of May 2024.PGIM Real Estate|May 2024|REF:013208 Page 6 2024 GLOBAL OUTLOOKUnited StatesUKEUJapanSouth KoreaAustralia222324252627282930313233Regulatory changes will have diferent efects across markets depending on bank market share and implemen

20、tation timeline of Basel III frameworkFramework finalizedFrameworknot yetfinalizedGLOBAL DEBT MARKETS ARE SET FOR TRANSFORMATIONEvolving market dynamics highlight the ongoing shift from traditional bank lenders to alternative capital sourcesKey Themes Regulatory pressures on banks and challenging ma

21、rket conditions limit capacity for new lending.Loan maturities create refinancing needs and demands for debt capital.Funding gaps emerge across markets and sectors.Interest rate reductions will ease valuation pressures,enhancing credit and equity cushions.Substantial opportunities for alternative le

22、nders to capitalize on an improving balance of risk-reward.ESTIMATED REAL ESTATE LOAN MATURITIES(US$BILLION)BASEL III FINALIZATION IMPLEMENTATION TIMELINECOMMERCIAL REAL ESTATE DEBT MARKET COMPOSITION BY INVESTOR GROUPIncreased regulatory pressures will have varying impacts across marketsSources:Mor

23、tgage Bankers Association,AFME,ECB,Cushman&Wakefield,MSCI,Bayes Business School,IREBS,IEIF,APRA,PGIM Real Estate.As of May 2024.Estimates are not guaranteed and may not be a reliable indicator of future results.02004006008001,0001,2001,4001,6002425262728United StatesEuropeDeveloped Asia PacificA

24、 signifcant volume of debt is set to mature globally in the next few yearsBankCMBSGSE21%Debt Funds/Other12%13%16%38%79%5%6%10%United StatesEuropeDevelopedAsia PacificInsurance CompaniesInsuranceCompaniesCMBSDebt Funds/OtherDebt Funds/Other3%Insurance Companies2%CMBS1%Bank94%BankDeveloped Asia Pacifi

25、c refers to Australia,Hong Kong,Japan,South Korea,New Zealand and Singapore.GSE refers to government sponsored agencies.Sources:Mortgage Bankers Association,AFME,ECB,Cushman&Wakefield,MSCI,Bayes Business School,IREBS,IEIF,APRA,Fitch Ratings,PGIM Real Estate.As of May 2024.Forecasts are not guara

26、nteed and may not be a reliable indicator of future results.PGIM Real Estate|May 2024|REF:013208 Page 7 2024 GLOBAL OUTLOOKGLOBAL RETURNS IMPROVING IN 2024,ACCELERATING IN 2025Asia Pacific is leading the recovery in 2024,along with global logistics markets,and the outlook is for stronger returns ahe

27、ad across the board from 2025MSCI GLOBAL ANNUAL PROPERTY INDEX ALL PROPERTY TOTAL RETURN(%P.A.)MSCI INDEX FORECAST TOTAL RETURNS BY SECTOR AND REGION(%P.A.)Global Forecasts:Key Takeaways The repricing has a little further to go in some parts of the market and this is weighing on overall 2024 returns

28、,notably in parts of the market where uncertainty about occupier demand is high(e.g.U.S.office,European retail),where there are concerns about supply(e.g.U.S.apartment)and where yields are still very low(e.g.Europe apartment).Logistics and industrial markets are most of the way through their correct

29、ion and are set to record positive returns in 2024 and beyond,while U.S.retail has already seen a big adjustment in relative values and is now benefiting from an improving NOI growth outlook.By region,Asia Pacific is leading the recovery partly because yield compression at the back end of the last c

30、ycle was more subdued but also because of its strong domestic and regional growth dynamics,which are limiting the need for significant yield adjustment.Overall,returns by sector and region are set to even out from 2025 onwards on the back of repricing and supply factors,so local market dynamics are

31、set to play an important role in determining portfolio construction,moving away from the sector-driven model of the last cycle.-15%-10%-5%0%5%10%15%20%020304050607080952728Income ReturnIncome Growth ImpactYield ImpactOther EffectsTotal ReturnForecastsYield shift has

32、further to run in some parts of the global market and will weigh on performance in 1H24,before returns accelerate again in 2025Sources:MSCI,PGIM Real Estate.As of May 2024.Sources:MSCI,PGIM Real Estate.As of May 2024.Forecasts are not guaranteed and may not be a reliable indicator of future results.

33、-15%-10%-5%0%5%10%Asia Pacific IndustrialAsia Pacific RetailU.S.RetailAsia Pacific OfficeAsia Pacific ResidentialU.S.IndustrialEurope IndustrialU.S.ResidentialEurope OfficeEurope ResidentialEurope RetailU.S.OfficeRising yields are weighing on parts of the U.S.and European markets in 2024;Asia Pacifc

34、 values already rising PGIM Real Estate|May 2024|REF:013208 Page 8 2024 GLOBAL OUTLOOKSUPPLY-DEMAND DYNAMICS SUPPORT RESILIENT INCOME GROWTHSupply growth is set to remain below average in the coming yearsHigh construction costs,falling values and limited debt availability have dampened th

35、e supply pipeline significantly.Borrowing constraints are set to hold back deliveries for several more years,even as conditions improve.The main exception is in logistics markets where supply is still increasing in response to the rapid e-commerce-related demand expansion and rising rents.Office and

36、 retail markets are generally seeing low levels of development activity,and U.S.apartment deliveries elevated in recent years,particularly in sunbelt markets are slowing too.At the same time,demand growth is holding up well,on the back of strong global labor markets that are supporting job creation

37、and household spending and,recently,optimism that economic conditions are starting to improve.All this means that real estate availability,especially of high-quality,newer space,is set to remain low.As demand stabilizes and then moves into a cyclical upswing,there is the potential for a significant

38、acceleration in rental growth.NET ADDITIONS TO ALL PROPERTY GLOBAL SUPPLY(%P.A.)FORECAST SUPPLY GROWTH BY SECTOR&REGION (2024-28,NORMALIZED VS.LAST CYCLE AVERAGE)GLOBAL COMMERCIAL PROPERTY ABSORPTION AND LEADING INDICATOR0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%8688909294969800020406080222

39、42628Supply growth was low through much of the last cycle and is set to fall back sharply in 2024 and 2025 on the back of higher construction costs in the last couple of years*Note:Our model-based supply indicator is estimated using a regression that includes real global construction costs(3-year la

40、g)and real prime global all property rents(2-year lag).Sources:CoStar,JLL,PMA,PGIM Real Estate.As of May 2024.Model-based supply indicator*Forecast-3-2-101Europe RetailAsia Pacific RetailU.S.OfficeU.S.RetailAsia Pacific OfficeEurope ApartmentAsia Pacific ApartmentU.S.ApartmentEurope OfficeAsia Pacif

41、ic LogisticsU.S.LogisticsEurope LogisticsGlobal RetailGlobal OfficeGlobal ApartmentGlobal Logistics-1.5-1.0-0.50.00.51.03242526Global Commercial Real Estate Absorption(4Q Rolling)Leading Indicator(+2Q)Sources:CoStar,Cushman&Wakefield,JLL,PMA,Eurostat,Manpower,Oxford Economics,PGIM Rea

42、l Estate.As of May 2024.Our leading indicator is stabilizing at levels consistent with long-term average demandNormalized Index:Global Absorption Relative to Its Long-Term AverageForecasts are not guaranteed and may not be a reliable indicator of future results.PGIM Real Estate|May 2024|REF:013208 P

43、age 9 2024 GLOBAL OUTLOOKPRODUCTIVITY-DRIVEN GROWTH MODEL IS SHIFTING CITY RENTAL DYNAMICSTechnology gains are changing the economic growth model and the future depends more on productivity,with implications for real estate investment strategySHARE OF EMPLOYMENT AND PRODUCTIVITY GROWTH IN OVERALL GD

44、P GROWTHRELATIVE PRODUCTIVITY GROWTH VS.EMPLOYMENT SHARE GLOBAL CITIES(2024-28)In the last cycle,the expansion of jobs helped support economic growth.However,with an aging population and the prospect of a shrinking working-age population in most developed economies,the future depends more on product

45、ivity growth on the back of technological advances,including AI.This story is playing out around the world,albeit with the United States seeing a smaller shift compared to the last cycle,due to its already large technology sector.These forces are affecting local market dynamics,and city growth model

46、s differ.Productivity-driven cities exhibit higher real rental growth over time,but it is less resilient and more cyclical.Employment-driven cities exhibit lower real rental growth over time,but it is more resilient and less cyclical.Growth strategies should lean toward deploying capital in higher p

47、roductivity cities,but core funds and credit strategies will need to balance exposure.0%20%40%60%80%100%EmploymentProductivity-20 -282010-20 -202024-28United StatesEuropeAsia PacificGlobalLondonTokyoStockholmMelbourneSydneyBrisbaneHoustonDallasMiamiAtlantaMadridWashi

48、ngtonNew YorkBostonLos AngelesMilanSan FranciscoBerlinChicagoOsakaAmsterdamSeoulParisMunichHong KongFrankfurtHamburgSingaporeBeijingShanghai-2%-1%0%1%2%3%-50%-40%-30%-20%-10%0%10%20%30%40%50%Relatively Less Resilient/More Productivity-Driven CitiesRelatively More Resilient/More Employment-Driven Cit

49、iesAnnual Productivity Growth,Relative to City AverageEmployment Share of GDP Growth,Relative to Global City AverageOECD PRODUCTIVITY,EMPLOYMENT AND REAL GDP GROWTH-6%-4%-2%0%2%4%6%94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24 26 28Employment GrowthProductivity GrowthGDP GrowthForecastsSources:OEC

50、D,Oxford Economics,PGIM Real Estate.As of May 2024.Sources:OECD,Oxford Economics,PGIM Real Estate.As of May 2024.Forecasts are not guaranteed and may not be a reliable indicator of future results.PGIM Real Estate|May 2024|REF:013208 Page 10 2024 GLOBAL OUTLOOKGEOGRAPHY AGAIN THE DOMINANT DRIVER OF O

51、UTPERFORMANCEGeography is overtaking sector again as the most important driver of returns,and portfolio decision-making needs to reflect this new reality,combining themes with location decisionsDRIVERS OF MODELLED INVESTMENT OUTPERFORMANCE(%)RELATIVE TOTAL RETURN PERFORMANCE:CITIES AND SECTORS 2023R

52、ANKING OF ANNUAL MSCI SECTOR-REGION RETURNS OVER TIME(%P.A.)During the last cycle,geography gave way to sector as the dominant driver of relative performance on the back of the global rise of e-commerce and its associated industrial versus retail play.This accelerated during the pandemic but is now

53、easing.Changing international trade patterns,along with region-specific shocks and differential regional responses to global events,are leading to diverging country and regional returns.A ranking of returns over time shows that outperformance can persist,e.g.U.S.industrial during the last cycle,but

54、also that holding a diversified portfolio protects against the risk of underperformance in a given sector or region.Since 2022,picking the right location frst has once again become more important to driving outperformanceSource:PGIM Real Estate.As of May 2024.0%2%4%6%8%10%12%14%0951617181

55、92021222324Geography-Driven OutperformanceSector-Driven OutperformanceSources:MSCI,PGIM Real Estate.As of May 2024.U.S.IndustrialAsia Pac.ApartmentAsia Pac.RetailAsia Pac.IndustrialAsia Pac.OfficeEuropeRetailEuropeIndustrialEuropeApartmentEuropeOfficeU.S.OfficeU.S.RetailU.S.ApartmentRegional Key2028

56、202720262025202420232022202000092008200720062005200420037.4%7.8%8.9%9.0%6.6%0.8%15.3%39.8%11.0%12.3%14.8%14.8%11.6%13.9%14.8%13.3%11.5%15.6%17.6%3.3%2.9%17.1%18.1%22.7%18.4%16.7%7.3%7.6%7.9%8.1%3.8%0.6%8.3%27.3%10.5%10.7%13.5%12.1%8.6%13.8%12.9%12.5%11.3%1

57、4.6%13.7%1.6%2.1%15.1%16.6%19.5%13.6%11.6%6.6%6.9%7.5%7.5%3.6%0.2%7.0%17.1%7.8%9.2%9.1%10.0%8.4%12.1%11.7%10.5%10.9%13.0%12.9%1.5%1.9%12.0%15.7%18.0%13.3%10.2%6.5%6.8%7.5%7.2%3.0%-1.5%6.4%11.5%6.3%9.0%8.8%9.7%8.2%11.6%11.6%10.0%10.5%12.7%9.8%0.3%-0.4%12.0%14.2%15.3%12.6%9.9%6.5%6.5%7.3%7.1%2.6%-2.0%

58、4.4%11.3%5.3%8.1%8.1%8.7%7.9%10.9%11.4%9.9%9.5%9.4%9.7%-0.1%-2.5%11.0%14.1%15.1%12.2%9.2%6.3%6.2%7.0%7.1%1.9%-2.1%3.6%8.4%4.3%8.0%8.1%8.0%7.6%10.1%10.1%8.6%7.5%6.9%9.6%-0.5%-4.8%10.5%13.4%15.0%11.1%8.6%6.0%6.1%7.0%7.0%1.1%-2.4%3.5%7.9%2.6%6.8%8.1%8.0%7.4%9.7%9.5%8.0%6.7%6.9%7.3%-3.9%-5.6%10.0%13.2%1

59、4.2%10.6%7.8%5.7%5.8%6.4%5.9%-1.4%-2.7%3.0%5.8%1.7%6.2%7.0%7.1%7.0%9.0%9.5%7.7%6.0%6.8%7.0%-4.4%-5.8%8.4%12.7%11.0%9.0%7.3%4.8%4.5%5.8%5.7%-2.9%-4.0%1.8%5.6%1.0%5.3%6.2%6.8%7.0%8.8%8.9%6.2%4.3%6.7%6.9%-13.2%-7.6%8.4%12.7%10.1%8.6%6.8%4.7%4.3%5.6%5.3%-3.1%-6.1%0.9%5.4%-0.4%4.3%5.8%6.1%6.6%8.8%8.3%6.2

60、%4.3%6.1%6.2%-16.6%-8.0%7.3%11.9%9.7%7.8%5.7%4.2%4.2%4.7%4.8%-5.0%-6.8%-3.7%4.9%-4.8%0.2%3.1%5.9%6.1%8.1%7.3%5.6%4.0%6.0%5.7%-19.0%-9.3%4.5%11.2%8.8%6.5%4.3%4.0%4.2%4.4%4.8%-9.2%-16.2%-5.1%4.0%-8.2%-0.3%3.0%5.0%5.5%7.3%6.5%5.2%3.0%5.5%3.8%-20.5%-9.6%4.0%7.0%8.0%6.1%3.2%Te case for holding a geograph

61、ically diversifed portfolio is nowdominating strategic investment recommendationsSource:PGIM Real Estate.As of May 2024.-10%-5%0%5%10%15%GermanyFranceFinlandNetherlandsSwedenItalyAustriaOffice-CBDUnited KingdomApartmentOffice-Non-CBDSpainAustraliaIrelandBelgiumDenmarkNorwayUnited StatesPortugalRetai

62、lLogisticsHong KongChinaJapanSingaporeKoreaSectorGeographyForecasts are not guaranteed and may not be a reliable indicator of future results.PGIM Real Estate|May 2024|REF:013208 Page 11 2024 GLOBAL OUTLOOKCity dynamics are set to play an important role in determining investment performance in the ne

63、xt cycleINTERQUARTILE RANGE OF ANNUAL GLOBAL CITY RETURNS(%)ANNUAL GLOBAL CITY PRIME TOTAL RETURNS 2023(%)City Returns Analysis:Key Takeaways For much of the last cycle,sector stories and the impact of low interest rates dominated,while the performance of individual cities became increasingly simila

64、r.This has already started to change with the gap between stronger and weaker locations rising significantly.Of course,sector stories remain important,but our view is that the next cycle will be characterized by the renewed impact of geographical differences on returns at the portfolio level.5%10%15

65、%20%25%30%000204060802224Source:PGIM Real Estate.As of May 2024.Te gap between the top-and bottom-performing cities is widening again-30%-20%-10%0%10%20%30%LyonBerlinViennaParisHamburgFrankfurtAustinSan FranciscoMunichOaklandSan JoseHelsinkiBrusselsPortlandOsloLondonAtlantaAmsterdamDenver

66、CharlotteNew YorkDallasPhoenixHoustonLos AngelesSeattleNashvilleBostonRaleighOrange CountyTampaMilanDublinCopenhagenWarsawLisbonRomeMelbourneSan DiegoStockholmMadridMiamiNewarkWashington DCMinneapolisChicagoBarcelonaTokyoPhiladelphiaOsakaShanghaiBeijingSingaporeSydneyHong KongManchesterSeoulSources:

67、CoStar JLL,PMA,PGIM Real Estate.As of May 2024.Looking at returns over the past year shows how wide the range of performance is both across cities and also within cities in diferent sectorsRange of returns across sectors:CBD office,non-CBD office,in-town retail,logistics and apartmentWeighted city t

68、otal returnTHE VARIATION IN CITY PERFORMANCE IS BROADENINGPART IIPORTFOLIO CONSTRUCTION2024 GLOBAL OUTLOOKPGIM Real Estate|May 2024|REF:013208 Page 13 PGIM Real Estate|May 2024|REF:013208 Page 13 GLOBAL CORE/CORE+STRATEGIESKEY FACTOR:Focus on income growth to drive core returns through the cycleBREA

69、KDOWN OF MSCI GLOBAL ALL PROPERTY TOTAL RETURNS(%)Summary of Key PointsFor core strategies,the narrative is changing.After a significant value correction,2024 represents an opportunity to deploy capital into a compelling investment vintage.The next cycle is going to be different and a new approach t

70、o core portfolio construction is needed.Unlike last cycle when yield compression and big sector plays dominated returns,this time the picture will be more balanced.Returns are set to be mainly driven by income returns,as yields are higher,and income growth.Timing is crucial to portfolio strategy.The

71、re are still risks in the near term,so portfolio strategy should retain a more defensive slant in 2024,pivoting toward a greater balance of growth-driven strategies once the recovery is established.Three things to focus on right now:Assets linked to structural themes basic needs,living,digitalizatio

72、n which have defensive income characteristics.Focus on high employment cities over productivity-driven markets to limit volatility and downside risk.Consider rebuilding some allocation to retail where higher income yields can be secured on defensive income streams.Sources:MSCI,PGIM Real Estate.As of

73、 May 2024.Sources:CoStar,Cushman&Wakefield,JLL,PMA,MSCI,PGIM Real Estate.As of May 2024.Last cycle:Yield compression-driven returnsNext cycle:Resilient income-and growth-driven returns-45%-40%-35%-30%-25%-20%-15%-10%-5%0%Off.Ret.Log.Apt.Off.Ret.Log.Apt.Off.Ret.Log.Apt.Off.Ret.Log.Apt.All Prop.Pe

74、ak to 1Q24Value Adjustment Still to ComeUnited StatesEuropeAsia PacificGlobalGlobal value declines have been substantialThe global repricing is nearly done and borrowing rates are set to easeEntry at a low value basis after a substantial correctionAttractive vintage,with 2024-25 optimum for long-ter

75、m invest-ment strategiesHigher income returns than through much of the last cycleResilient income growth linked to struc-tural trends in a low supply environmentPART II PORTFOLIO CONSTRUCTION KEY FACTOR:Attractive entry point as the correction is nearly doneEXPECTED PEAK-TO-TROUGH PRIME VALUE ADJUST

76、MENT BY SECTOR AND REGION (%)WHY CORE NOW?0%20%40%60%80%100%Last Cycle(2010-21)Next Cycle(2025+)Income ReturnIncome Growth ImpactYield Impact2024 GLOBAL OUTLOOKPGIM Real Estate|May 2024|REF:013208 Page 14 INDEX OF PRIME GLOBAL CITY ALL PROPERTY RENTS(1Q01=100)INDEX OF GLOBAL CAPEX SPENDING(%)4050607

77、08090014095 97 99 01 03 05 07 09 11 13 15 17 19 21 23 25 27Institutional Real Estate Capex(MSCI Global Annual Property Index)All Commercial Real Estate Real Investment SpendingGLOBAL VALUE-ADD STRATEGIESKEY FACTOR:City and sector selection holds the key to outperforming the wider marketKE

78、Y FACTOR:After a low investment cycle,many buildings are in need of fresh capital injections Sources:CoStar,Cushman&Wakefield,JLL,PMA,PGIM Real Estate.Sources:MSCI,OECD,Oxford Economics,PGIM Real Estate.As of May 2024.PART II PORTFOLIO CONSTRUCTIONHigh volume of loans maturing at higher interest

79、 rates and lower valuesRising need for capital,e.g.Capex/refurbishment Meeting ESG requirements Operational budgetsFunding gap emerges,capital structures stressed due to equity shortagesThe last cycle was characterized by a relatively low pace of investment going into the built environmentMany build

80、ings will need fresh capital injections,especially as ESG requirements are growing tooSummary of Key PointsI.Structural:Develop and reposition assets that meet occupier needs in sectors that are benefiting from favorable structural tailwinds,i.e.that exhibit sustainably rising demand over time.Examp

81、les of key targets include:For-rent residential due to global housing shortages and ownership affordability constraints.Urban logistics as online retail penetration grows further globally.Data centers on the back of sharply rising demand for digital storage capacity and supply constraints.Senior and

82、 student living linked to demographic trends and via returns-enhancing operational platforms.II.Tactical:Investment plays to capitalize on short-term cyclical drivers,such as rising tourism demand,and also inject capital due to capex shortfalls or where a funding gap emerges.Examples of key areas of

83、 focus include:Hotels and in-town retail in markets where tourism demand is rising.Office repositioning in low vacancy CBD markets,targeting productivity-driven cities that offer cyclical growth potential.Assets with stressed capital structures.=INJECT CAPITAL at an attractive basis targeting growth

84、 as global value recovery takes holdPGIM Real Estate|May 2024|REF:013208 Page 14 9000007080952728Rent IndexForecastLower QuartileUpper QuartileSelecting the right cities and submarkets can lead to outperformance.Upper quartile markets

85、 include U.S.logistics hubs,core European apartment markets and select CBD office markets in Europe and Asia PacificForecasts are not guaranteed and may not be a reliable indicator of future results.THE VALUE-ADD EQUATION TODAY2024 GLOBAL OUTLOOKPGIM Real Estate|May 2024|REF:013208 Page 15 INDEX OF

86、GLOBAL CAPEX SPENDING(%)KEY FACTOR:As interest rates fall,debt becomes accretive to transactions again,allowing deal volume to pick upALL PROPERTY YIELDS VS.DEBT COSTS MAJOR COUNTRIES(%)*Note:Asia Pacific refers to the office sector only.Sources:PMA,Chatham Financial,Knight Frank,Bloomberg,Oxford Ec

87、onomics,CREFC,Trepp,JLL,PGIM Real Estate.As of May 2024.2%3%4%5%6%7%8%9%10%2%4%6%8%10%20232%3%4%5%6%7%8%9%10%2%4%6%8%10%20242%3%4%5%6%7%8%9%10%2%4%6%8%10%2025United StatesEuropeAsia Pacific*Property yield(%)Debt coupon(%)Debt coupon(%)Debt coupon(%)Property yield(%)Property yield(%)GLOBAL CREDIT STR

88、ATEGIESPART II PORTFOLIO CONSTRUCTIONPGIM Real Estate|May 2024|REF:013208 Page 15 Forecasts are not guaranteed and may not be a reliable indicator of future results.Fixed-rate lending with elevated interest rates and margins.Build a portfolio of loans with cyclically high all-in coupon rates.Target

89、assets in cities and sectors that offer a resilient income growth story.Positive credit migration boosts the risk-return profile over time.Further NOI growth and an expected rebound in capital values is set to lead to improved cash flow,debt coverage ratios and lower LTVs.More emphasis on floating r

90、ate loans,with some additional value upside linked to the expected rebound in real estate values.Benefit from improving market conditions as lower borrowing rates and margins can be offset with higher origination volume and profit participation.Consider refurbishment strategies linked to the low sup

91、ply situation.Junior and mezzanine lending.Lower available debt on new senior loans creates a significant funding gap,which is driving opportunities.Improving financial conditions will lead to cheaper leverage,boosting leveraged returns and enhancing attractiveness of debt strategies.CORECORE+HIGH Y

92、IELDCoupons on new and floating rate debt to provide strong income returns despite expected spread tightening and lower interest rates.Lenders will continue to implement stricter lending criteria on new loans,and debt service coverage will remain a primary leverage constraint.CRE debt to provide sig

93、nificant spread premium over comparable corporate bonds.Debt returns are expected to exceed real estate equity returns in 2024.HIGH INTEREST INCOMELOWER ATTACHMENT POINTCOMPELLING RELATIVE VALUEDEBT RETURN DRIVERSPART I PART II PART III GLOBAL OVERVIEWPORTOLIO CONSTRUCTIONKEY INVESTMENT THEMESPGIM R

94、eal Estate|May 2024|REF:013208 Page 17 2024 GLOBAL OUTLOOKKey Value DriversNature of Opportunity Real Estate ApproachAge and Income DemographicsLiving needsOpportunity drivers:age demographics,urban population growth,housing ownership affordability,lack of supply/overcrowding,rising incomes,supply-c

95、onstrained submarkets,urban density.Suburban apartments Single-family housing Senior housing Student accommodationDigitalizationE-commerce demand and supply chain evolutionOpportunity drivers:resilient e-commerce growth,low supply,city and submarket dynamics,urban logistics demand growth,supply chai

96、n evolution.Digital infrastructureOpportunity drivers:secular demand growth for data,the need for ongoing investment and new facilities.Urban logistics Big box/supply chain Border industrial Hyperscale and colocation data centersResilient EmploymentNon-discretionary spendingOpportunity drivers:jobs-

97、driven demand,basic needs/grocery-anchored,discount concepts,defensive cash flow profile,attractive entry values.Grocery-anchored retail Discounters Retail warehousingSTRUCTURAL TRENDS Cyclical rebound in household spending and tourismDiscretionary spending growthOpportunity drivers:jobs-driven inco

98、me growth,tourism-driven retail spending,attractive entry values,spending per sqm/falling vacancy,cyclical upswing.Opportunity drivers:rising RevPAR,limited supply,ongoing demand growth.High tourism city-center retail markets Tourist-driven hotel marketsCyclical productivity gainsModern workplacesOp

99、portunity drivers:productivity gains driving space demand and higher rents in central locations,persistent low supply,ESG regulation and lack of suitable grade A space,attractive entry values.CBD offices in low supply marketsCapital market dislocationFunding gapOpportunity drivers:debt rollovers at

100、higher interest rates,bank retrenchment due to regulations,need for fresh capital.Asset-specific approach Debt rollovers Investing in capex projectsTACTICAL OPPORTUNITIESWHAT DRIVES INVESTMENT OPPORTUNITIES AROUND THE WORLD?PART III KEY INVESTMENT THEMESSUMMARY OF GLOBAL INVESTMENT OPPORTUNITIES AND

101、 KEY VALUE DRIVERS EQUITY AND CREDITPGIM Real Estate|May 2024|REF:013208 Page 17 Forecasts are not guaranteed and may not be a reliable indicator of future results.STRUCTURAL TRENDSInvestment conviction driven by basic needs and long-term structural trends that support ongoing demand creation.PART I

102、II KEY INVESTMENT THEMESPGIM Real Estate|May 2024|REF:013208 Page 19 LIVING NEEDSLiving strategies generate resilient income linked to the basic need of shelter.Lack of supply and ownership affordability are driving opportunities and growth potential in multi-and single-family,while the sheer size o

103、f demand linked to age demographics continues to support the outlook for senior housing.TOP INVESTMENT PICKS U.S.suburban apartments Single-family housing in the U.S.Sunbelt and the UK Apartments in major core European cities U.S.senior livingCOMMON GLOBAL THEMES:Ownership constraints and housing sh

104、ortagesGLOBAL HOUSE PRICES AND HOUSEHOLD INCOME(INDEX:2003=100)ESTIMATED GLOBAL HOUSING SHORTFALL,MAJOR ECONOMIES(%TOTAL HOUSEHOLDS)Sources:Oxford Economics,CoStar,PMA,U.S.Census Bureau,PGIM Real Estate.As of May 2024.80002602800002040608022242628House PricesHousehol

105、d IncomeHouse prices have grown much faster than incomes in recent years,stretching afordability especially as mortgage rates have risen tooForecastSources:Oxford Economics,CoStar,PMA,U.S.Census Bureau,PGIM Real Estate.As of May 2024.-4.5%-4.0%-3.5%-3.0%-2.5%-2.0%-1.5%-1.0%-0.5%0.0%013151

106、71921232527A signifcant shortfall of housing has opened up across the world in recent yearsForecasts-4%-2%0%2%4%6%8%10%Asia Pacific ResidentialU.S.ResidentialEurope ResidentialGlobal All PropertySources:MSCI,PGIM Real Estate.As of May 2024.MSCI INDEX FORECAST TOTAL RETURNS BY SECTOR AND R

107、EGION(%P.A.)Key Points Linked to the basic need for shelter,as well as diversification gains from many individual tenants,residential assets offer a resilient income with growth potential linked to rising incomes.Income yields are lower than in other sectors,but given a need to balance growth potent

108、ial and defensiveness in the current market environment,living strategies look an attractive play.Returns are currently in line with historical averages,but currently carry a lower market risk,especially where supply and availability are low.Shortages of high-quality housing can be linked to elevate

109、d construction costs as well as tougher planning rules that have deterred development in recent years.With affordability constraints limiting ownership,rents are expected to grow by 3%per year on average across global cities over the next 5 years as household incomes grow in line with expected highe

110、r wages linked to stronger productivity growth.One exception to this narrative is U.S.apartment markets,where there has been some oversupply,although occupancies are now stabilizing again.Asia Pacific,which has a small institutional residential investment sector,is set to lead returns in the short t

111、erm,but opportunities will be concentrated in major U.S.markets and parts of Europe from 2025 onwards,once repricing is complete.Forecasts are not guaranteed and may not be a reliable indicator of future results.PGIM Real Estate|May 2024|REF:013208 Page 20 U.S.APARTMENT AND SINGLE-FAMILY Demographic

112、 trends in the United States are particularly favorable to the suburban rental demand outlook,while ownership affordability remains stretched.There will be 5.3 million more people aged 35-50 over the next decade,an age range typically desiring larger accommodations and better schools that suburban l

113、ocations can offer.Dispersion among submarket apartment rents widened in the 2000s as urban market growth outpaced that of lower rent locations in the suburbs.However,this trend has been reversing for some time,owing to relative supply and demographic trends.Across the United States,rent premiums in

114、 urban core locations continue to fall as demand shifts to suburban,albeit lower rent,locations.While apartment rent growth expectations for 2024 are subdued because of elevated near-term supply deliveries,we expect rent growth to accelerate above long-term growth rates by 2026.Suburban markets look

115、 set to carry the strongest growth momentum into the upswing.Single-family rentals(SFRs)defined as non-stacked housing units with access to outdoor space and often including attached garages are the residential segment best suited to reap the benefits of expected household growth in the 35-50 age br

116、acket.SFRs are a more direct substitute for single-family homeownership that many families are priced out of(owing to features such as a yard and garage).Continued strong demand for SFRs will keep occupancies elevated,driving rental growth in excess of 4%p.a.from 2024-28,and above expectations for o

117、verall apartment rent growth despite similar going-in yields.Demand is particularly strong relative to multifamily in markets across the Southern United States where supply will weigh more on rental growth in 2024-25 than in other metros.As such,we believe investors can price continued strong growth

118、 for SFRs in these Southern markets while they should position for tempered near-term rent growth in Sunbelt apartment rents.Forecast02040608022242610%12%14%16%18%20%22%Rent premiums are falling for core locations as demand shifts to suburban areas0%1%2%3%4%5%6%7%VacancySupply Pipeline as

119、%of StockSuburbanUrbanSources:RealPage,PGIM Real Estate.As of May 2024.0%1%2%3%4%5%6%NashvilleAtlantaJacksonvilleCharlotteRaleighHoustonTampaPhoenixPalm BeachDenverOrlandoAustinDallasMiamiApartmentsSingle-Family RentalsSources:CoStar,RealPage,Green Street Advisors,PGIM Real Estate.As of May 2024.Nea

120、r-term apartment supply is a headwind in the Sunbelt,creating a wide gap between SFR and apartment expectationsAVERAGE DISPERSION(COEFFICIENT OF VARIATION)OF U.S.SUBMARKET RESIDENTIAL RENTS(%)U.S.RESIDENTIAL VACANCY AND SUPPLY BY LOCATION(%)RENT GROWTH FORECAST 2024-28(%P.A.)Forecasts are not guaran

121、teed and may not be a reliable indicator of future results.Suburban apartment opportunities are supported by demographics and supply gaps U.S.Sunbelt markets:Target single-family housingPGIM Real Estate|May 2024|REF:013208 Page 21 APARTMENT STRATEGIES IN EUROPE AND ASIA PACIFIC909551200.0

122、%0.2%0.4%0.6%0.8%1.0%1.2%1.4%03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25Change in Dwelling Stock-Major CitiesReal Construction Costs Index(+2Y,RHS,Inverted Scale)Supply growth has fallen back signifcantly on the back of a sharp increase in real-term building costs21a50556065

123、70750608022242628Rental HouseholdsConstant ShareTrend:Since 2005Trend:Last 5 Years+4.0 million+2.7 million+1.3 millionChange:2023-28Sources:Eurostat,PMA,PGIM Real Estate.As of May 2024.Rent premiums are falling for core locations as demand shifts to suburban areasForecast0%1%2%3%4%5%Paris

124、MilanCopenhagenAll PropertyMadridStockholmAmsterdamHamburgFrankfurtMunichRegional UK CitiesCentral LondonBerlinResilient rental growth outlook on the back of rising incomes and limited supplySources:PMA,PGIM Real Estate.As of May 2024.Hong Kong SingaporeTokyoSydneyMelbourneBrisbaneOsaka0%2%4%6%8%10%

125、0.0%0.5%1.0%1.5%2.0%2.5%Sources:Oxford Economics,CEIC,ARES,PGIM Real Estate.As of May 2024.Many Asia Pacifc cities have low vacancy and expanding housing demandCHANGE IN DWELLING STOCK(%P.A.)AND REAL CONSTRUCTION COSTS(INDEX)NUMBER OF RENTAL HOUSEHOLDS IN MAJOR EUROPEAN COUNTRIES(MILLION UNITS)FOREC

126、AST RESIDENTIAL RENTAL GROWTH BY MAJOR CITY(2024-28,%P.A.)HOUSEHOLD GROWTH(2024-28,%P.A.)AND APARTMENT VACANCY RATE(2023)The number of rental households in Europe has risen significantly in recent years.If the sector expands at a similar pace to over the last 5 years,there will be 4 million addition

127、al rental households by the end of 2028.Supply growth is being restricted by a combination of elevated building costs and higher underwritten exit yields due to the market correction.Housing availability is a major problem in core European cities,and landlords have pricing power to capture rental up

128、lifts linked to household income growth.Most cities are set to record headline rental growth of more than 3%per year over the next 5 years.Residential demand and rental growth potential will be supported by household growth in major urban areas that is forecasted to grow steadily over the next 5 yea

129、rs while vacancy rates remain tight in the near term.With the exception of Japan,this segment remains in its infancy,but opportunities remain for investors to provide professional and consistent housing offerings to meet growing needs.Examples include co-living in Hong Kong and Singapore and student

130、 housing in Australia.EUROPE:Rising demand and a lack of modern stock driving rental growthASIA PACIFIC:Opportunities linked to household growthForecasts are not guaranteed and may not be a reliable indicator of future results.Sources:Eurostat,PMA,Oxford Economics,PGIM Real Estate.As of May 2024.PGI

131、M Real Estate|May 2024|REF:013208 Page 22 SPECIALIST LIVING STRATEGIESMadridBarcelonaStockholmLondonManchesterBeijingHong KongSingaporeShanghaiSeoulAtlantaAustinDallasHoustonPhoenix0%1%2%3%4%5%6%7%8%9%10%-3.0%-2.0%-1.0%0.0%1.0%2.0%3.0%4.0%High Density CitiesLow Density CitiesAnnual population growth

132、:75+Sources:Oxford Economics,PGIM Real Estate.As of May 2024.Annual population growth:15-29 yearsMost major cities have fast rising over-75 populations,driving senior housing demand,notably in Asia Pacifc and the United StatesStudent and co-living strategies look most attractive in dense cities with

133、 growing younger populations,notably in EuropeU.S.senior housing occupancy is rising.76%81%86%91%96%-6%-4%-2%0%2%4%6%09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28Supply GrowthDemand GrowthOccupancy(R)Forecast.supporting a strong rental growth outlook-1%0%1%2%3%4%5%6%7%8%0912

134、32527ForecastANNUAL POPULATION GROWTH FORECASTS BY AGE GROUP AND DENSITY(2024-33,%P.A.)U.S.SENIOR HOUSING QUARTERLY ABSORPTION AND OCCUPANCY(%)U.S.SENIOR HOUSING RENTAL GROWTH In the United States,most major cities are expected to record significant growth in over-75s driving senior housing demand,i

135、ncluding in Houston,Austin,Atlanta,Dallas and Phoenix.In Europe,senior population growth rates are a little lower although still imply a significant expansion of senior living demand over time.In Asia Pacific,major cities such as Singapore,Seoul,Beijing and Shanghai are expected to record steep incr

136、eases in the number of over-75s over the next decade.Elevated house prices have boosted affordability and institutional participation is set to increase.When it comes to living concepts such as student accommodation or co-living(shared housing facilities,typically fully furnished with flexible lease

137、 terms),cities with high density,limited supply,affordability pressures and either a stable or growing younger population look to offer the most potential.Examples include Hong Kong and Shanghai in Asia or Madrid,Barcelona,Stockholm,London and Manchester in Europe.In the United States,over 5 million

138、 more households are set to able to afford market-rate senior housing over the next decade,sustaining strong demand growth.Occupancies are rising and are expected to move past prior peak levels by the end of this year,driving ongoing rental growth.Rental growth forecasts are based on expectations of

139、 rapid growth in the number of households with the financial readiness to pay for senior housing.By 2032,middle-income households will have an inflation-adjusted average net worth of$500,000,mostly comprised of home equity enough to pay for an average stay of about 2 years even in the most expensive

140、 markets,although most residents are significantly wealthier than the average.The number of households that can afford a 5-year stay in senior housing is set to rise by 90%over the next 8 years,to 11.7 million.U.S.senior housingDemographics and density are key drivers of living opportunities at the

141、city levelForecasts are not guaranteed and may not be a reliable indicator of future results.Sources:National Investment Center for Senior Housing Care,Green Street Advisors,PGIM Real Estate.As of May 2024.PGIM Real Estate|May 2024|REF:013208 Page 23 E-COMMERCE DEMAND AND SUPPLY CHAIN EVOLUTIONThe r

142、esiliency of ongoing e-commerce growth is translating into space absorption and helps make the case for logistics as a sector that can carry on delivering real rental growth.Its not all about urban logistics either,as supply chain optimization and trade flows also drive demand.TOP INVESTMENT PICKS U

143、rban logistics in high rent submarkets in lower density U.S.cities Last mile assets in European cities with fast online growth Core distribution corridors in Europe and Asia Pacific Mexico industrial in border areasCOMMON GLOBAL THEMES:E-commerce drives real rental growth in logisticsGLOBAL ONLINE R

144、ETAIL SHARE(%)AND INDEX OF REAL LOGISTICS RENTS(2014=100)ANNUAL LOGISTICS REAL RENTAL GROWTH BY REGION(2024-28,%P.A.)9001402%4%6%8%10%12%14%16%18%20%22%0002040608022242628Online Retail Share-Major Cities(+2Y)Real Rental Index(RHS)Pre-2012 TrendPost-2012 TrendHigher online spend

145、ing share,higher real terms logistics rentsForecastsE-commerce is expanding in major cities across the world,driving expectations of an ongoing resilient real rental growth story in logistics0%1%2%3%4%5%EuropeAsia PacificUnited StatesLast Cycle Upswing(2013-23)Forecast Period(2024-28)As e-commerce a

146、doption rates slow,real rental growth is moderating,but remains resilient-2%0%2%4%6%8%10%Asia Pacific IndustrialU.S.IndustrialEurope IndustrialGlobal All PropertySources:MSCI,PGIM Real Estate.As of May 2024.MSCI INDEX FORECAST TOTAL RETURNS BY SECTOR AND REGION(%P.A.)Key Points Although e

147、-commerce adoption rates are slowing,real rental growth continues to trend structurally higher albeit with still large country differences.And then there are signs of e-commerce penetration hitting near saturation points but at different levels of penetration.Sources:CoStar,Cushman&Wakefield,JLL

148、,PMA,Oxford Economics,EIU,PGIM Real Estate.As of May 2024.Those differences,along with the limited part yield shift now plays in driving returns,mean local occupier market dynamics matter more for returns.Nonetheless,outside of the United States and apart from the UK,China and South Korea,on our for

149、ecasts,major markets with much lower levels of online penetration offer the potential for ongoing strong real rental growth.Differences across countries speak to different strategic approaches.In the United States,cities face supply risk,while Asian and European cities offer more growth potential an

150、d urban development opportunities,although big bets on supply speak to risks if online spending growth softens.Forecasters 5-year ahead penetration rates have already been downgraded from a year ago.Outside of urban logistics,supply chain resilience and optimization are big themes,dictating opportun

151、ities in national distribution markets,on border frontiers and in trade-driven markets around ports and airports.This is particularly the case for Hong Kong,Singapore and to a lesser extent Seoul as regional trade across Asia Pacific is set to pick up in line with a recovery in global growth.Rental

152、growth might yet prove to be stronger.Forecasts are not guaranteed and may not be a reliable indicator of future results.PGIM Real Estate|May 2024|REF:013208 Page 24 LOGISTICS DRIVEN BY E-COMMERCESources:Oxford Economics,PMA,EIU,PGIM Real Estate.As of May 2024.-2%0%2%4%6%8%10%12%PhiladelphiaChicagoS

153、an DiegoLos AngelesNewarkOaklandSan FranciscoOrange CountyDenverCharlotteMinneapolisPortlandNew YorkSeattleWashington,D.C.TampaBostonSan JoseMiamiAtlantaRaleighPhoenixNashvilleDallasHoustonAustinSeoulSyndeyHong KongMelbourneBrisbaneBeijingShanghaiSingaporeTokyoOsakaLondonMadridLisbonParisManchesterV

154、iennaHamburgLyonDublinFrankfurtBarcelonaRomeMunichBerlinAmsterdamBrusselsStockholmMilanCopenhagen0%5%10%15%20%25%30%35%40%20232024-28 Growth In Real Online Sales(%p.a.)(RHS)Tere is still a base efect to consider;faster growth rates are typically in smaller markets Cities such as London in Europe,San

155、 Francisco in the United States and Seoul in Asia Pacific all have very high online sales penetration.Urban density is a factor in driving this,allowing delivery business models to scale and achieve profitability more quickly,whilst meeting a demand from cash-rich,time-poor households.Urban developm

156、ent remains hard to execute given such factors as planning regulations and high land prices.The need for urban logistics,notably in the bigger cities outside of the United States,remains a common theme.While markets with lower existing online penetration typically have stronger growth outlooks,there

157、 are risks.Forecasts suggest that some European and Asian cities including Madrid,Milan,Singapore and Sydney simply wont follow the pattern in the United States and the UK.The risks of oversupply and unutilized capacity are higher in these markets.In the United States,a feature of lower density,non-

158、coastal markets(including Charlotte,Austin,Nashville and Dallas)is that higher rent submarkets typically found close to the main population centers tend to perform better.At the same time,construction has often been higher in lower rent submarkets,resulting in higher vacancies.In these markets the s

159、cope for outperformance through submarket selection is higher than in larger gateway markets where submarket performance is more consistent.24aOrlandoCharlotteSeattleAustinNashvilleDallasSan DiegoDenverPhoenixRaleighAtlantaTampaJacksonvilleNY/NJChicagoLos Angeles/Inland EmpireBay AreaSouth FloridaWa

160、shington,D.C.HoustonBoston-0.2-0.100.10.20.30.40.5Sources:CoStar,PGIM Real Estate.As of May 2024.A higher correlation requires a greater emphasis on higher rent submarketsCORRELATION OF SUBMARKET OCCUPANCY RATE AND RENT LEVEL BY U.S.METRO AREAESTIMATED CITY ONLINE PENETRATION RATES AND FORECASTED GR

161、OWTH IN ONLINE SALESGlobal city e-commerce adoption rates matterIn the United States,submarket dynamics are importantForecasts are not guaranteed and may not be a reliable indicator of future results.PGIM Real Estate|May 2024|REF:013208 Page 25 SUPPLY CHAIN EVOLUTION IN MEXICO10%11%12%13%14%15%16%17

162、%18%200300400500600700800900040506070809512223U.S.-Mexico Merchandise Trade($B)U.S.-China Merchandise Trade($B)Mexicos share of U.S.trade(%,RHS)Sources:U.S.Department of Transportation,U.S.Census Bureau,PGIM Real Estate.As of May 2024.U.S.-Mexico merchandise trade reached$800 b

163、illion in 2023,further widening the gap between U.S.-China trade levelsForecast Global trade patterns are recovering and evolving and that is leading to a broader set of opportunities in logistics and industrial.The shifting U.S.-China relationship has allowed Mexico to capitalize by increasing its

164、trade volumes with the United States.Mexicos share of trade with its leading trade partner,the United States,has climbed from 11%in 2008 to 16%in 2023,supported by its long-standing strength in production of cars and trucks,medical instruments,appliances and computers.Demand for Mexican industrial r

165、eal estate has increased in line,driving vacancy to historical lows.Growth in Mexican industrial demand and rents creates attractive investment opportunities,particularly in manufacturing hubs like Monterrey,Tijuana and Juarez.As manufacturers expand and deepen their local presence in these markets,

166、we expect rent growth will continue over the next 5 years and beyond.Border regions in Mexico that are set to benefit include:Baja California(Transport equipment,IT/Electronics)Sonora(Transport equipment,Minerals/Metals)Chihuahua(Transport equipment,IT/Electronics)Coahuila(Transport equipment,Minera

167、ls/Metals)Nuevo Leo Baja(Transport equipment,Electric power)Tamaulipas(Transport equipment,IT/Electronics)Sources:CBRE,Green Street Advisors,PGIM Real Estate.As of May 2024.A dramatic fall in vacancy has prompted a period of strong industrial rental growth in Mexico-10%-5%0%5%10%15%20%09 10 11 12 13

168、 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28Rent GrowthVacancyForecastMEXICO INDUSTRIAL VACANCY VS.RENT GROWTH U.S.MERCHANDISE TRADE WITH MEXICO AND CHINA(US$BILLIONS)Vacancy is low and industrial rents are surgingTrade between the United States and Mexico is trending higherForecasts are not guaran

169、teed and may not be a reliable indicator of future results.PGIM Real Estate|May 2024|REF:013208 Page 26 DIGITAL INFRASTRUCTUREA lack of modern data centers in key markets is set against a secular demand growth story.The market is moving toward a strong rental growth outlook.Development of energy-eff

170、icient data centers is the best route into the market.TOP INVESTMENT PICKS Hyperscale data centers Colocation data centers serving urban areas with supply constraintsCOMMON GLOBAL THEME:Secular demand growth is coming up against supply limitations26cSources:Green Street Advisors,CBRE,Structured Rese

171、arch,JLL,PGIM Real Estate.As of May 2024.-15%-10%-5%0%5%10%15%20%920212223 24F 25F 26FIncomeYield ImpactRent ImpactTotal ReturnsImproving returns outlook on the back of rental growthESTIMATED ANNUAL GLOBAL DATA CENTER TOTAL RETURNS(UNLEVERED,POWERED SHELL AND CORE ASSETS)Key Points Ongoin

172、g technological transformation,including new developments in AI and the continuous adoption of cloud computing,are expected to underpin the demand outlook for data centers in key global data center markets.However,supply has so far lagged behind demand due to high barriers in obtaining planning perm

173、issions and securing power,especially renewable energy.A shortfall of data centers is set to emerge across Europe,with Amsterdam forecasted to have the biggest undersupply due to past policy restrictions that have limited the development pipeline.The operational nature of data centers also offers a

174、wide risk-return spectrum for investors to participate at different levels,ranging from relatively more stable rental income generation akin to traditional real estate leases to higher risk profit sharing from the operational business.At the moment,the most interesting route into the market is devel

175、opment in combination with an operating partner.GLOBAL DATA CENTER SUPPLY COMMISSIONED POWER(MEGAWATTS)EUROPE:DATA CENTER SUPPLY SHORTFALL FLAPD*(MEGAWATTS)5,00010,00015,00020,00025,00030,0001222324F25F26FUnited States and CanadaEuropeAsia PacificLatin AmericaAfricaGlobal data center supp

176、ly has been rising in response to secular growth in data storage needs.*FLAPD refers to Frankfurt,London,Amsterdam,Paris and Dublin.Existing Supply:OccupiedUsable Vacant SpaceTotal Pipeline SupplyCumulative Supply Shortfall.but capacity shortfalls are still emerging,for example in Europes FLAPD*mark

177、ets01,0002,0003,0004,0005,0006,00020232024F2025F2026F2027FForecasts are not guaranteed and may not be a reliable indicator of future results.Sources:datacenterHawk,Structured Research,CBRE Data Centre Solutions,African Data Centre Association,Xalam Analytics,Company Reports,DC Byte,Green Street Advi

178、sors,PGIM Real Estate.As of May 2024.PGIM Real Estate|May 2024|REF:013208 Page 27 NON-DISCRETIONARY SPENDINGNecessity-based retail offers defensive income streams supported by elevated employment and attractive entry prices after a steep downturn.There are headwinds from online spending,but retail p

179、arks,strip centers and discounter-driven units offer resilience.COMMON GLOBAL THEMES:Ongoing cost of living pressures and limited developmentUNITED STATES:NET RETAIL SUPPLY ADDITIONS VS.STRIP CENTER OCCUPANCYEUROPEAN PRIME RETAIL PARKS RENTAL GROWTH(%)MSCI INDEX FORECAST TOTAL RETURNS BY SECTOR AND

180、REGION(%P.A.)ASIA PACIFIC SUBURBAN RETAIL RENT AFFORDABILITY INDEX (LONG-TERM AVGERAGE=100)Key Points Necessity-based retail captures defensive retail spending especially around groceries and discounted goods where online competition is muted and real household income is being stretched.The legacy o

181、f high jobs growth and little development for a number of years is helpful in terms of generating broad-based demand.This segment of the market offers a resilient income-driven returns story and at attractive valuations given the decline in liquidity and values in the retail sector.In the United Sta

182、tes,strip malls,dominated by both convenient neighborhood retail as well as big box discounters,remain attractive.Occupancies continue to rise,offering rental gains.In Europe,opportunities remain focused on discounter-oriented retail parks and grocery-anchored schemes that offer attractive entry yie

183、lds and a stable-looking rental outlook.Core European markets look most resilient,although the UKs substantial rent and yield correction means it starts from a low value basis.In Asia,opportunities in the convenient neighborhood retail market center on those in which occupier affordability has impro

184、ved in contrast to prime units,notably Brisbane,Sydney and Singapore.TOP INVESTMENT PICKS Strip centers and big box retail in the United States Core Continental Europe and UK retail parks Discount retail in Germany and France Neighborhood retail in Asia Pacific markets like Singapore and Australia27

185、a88%90%92%94%96%98%050 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24 26Net Supply Additions(Million SF)Occupancy(RHS)Sources:Green Street,NCREIF,CoStar,PGIM Real Estate.As of May 2024.Strip center occupancies are rising in the United StatesForecast-20%-15%-10%-5%0%5%10%15%02040608101

186、242628Core EuropePeripheryUKSources:PMA,PGIM Real Estate.As of May 2024.Retail parks have been defensive in core continental Europe809013161922Prime RetailBrisbaneMelbourneSydneySingaporeSource:PGIM Real Estate.As of May 2024.Retail rent afordability improvingAbove long-term in

187、-store retail sales to rent ratio-6%-4%-2%0%2%4%6%8%Asia Pacific RetailU.S.RetailEurope RetailGlobal All PropertySources:MSCI,PGIM Real Estate.As of May 2024.Forecasts are not guaranteed and may not be a reliable indicator of future results.TACTICAL OPPORTUNITIESOpportunities arising from

188、 near-term growth,the anticipated cyclical value rebound and market dislocation.PART III KEY INVESTMENT THEMESPGIM Real Estate|May 2024|REF:013208 Page 29 DISCRETIONARY SPENDING REBOUNDLow rents,limited new supply and improving affordability mean that global retail markets have a platform to grow fr

189、om rising incomes on the back of a productivity boost to spending power.In tourist-driven cities,retail and hospitality opportunities are emerging on the back of this trend.COMMON GLOBAL THEME:Prime,in-town retail rents are low(almost)everywherePRIME HEADLINE HIGH STREET RETAIL RENTS,END 2023 LEVEL

190、VS.END 2019 LEVEL(%)MSCI INDEX FORECAST TOTAL RETURNS BY SECTOR AND REGION(%P.A.)UNITED STATES:RETAIL RENT AFFORDABILITY INDEX*Key Points Retail is starting from a low base everywhere.Rents are down across most major retail formats and the correction in values,via higher yields,has been significant,

191、starting well before the current global value downturn got underway.At the same time,supply growth has been very low and older space has been removed from the market.Vacancy has risen across the board,but this adjustment is slowing and rents are starting to look affordable again.Across many major gl

192、obal retail markets,forecasts are being revised upwards.In the United States,prospects for rental growth have been boosted by a strong improvement in tenant affordability in recent years.While the retail sector in Asia Pacific and the United States has started to recover,European markets are at an e

193、arlier stage in their adjustment process.The outlook is improving,but near-term return prospects for higher quality retail assets are being held back by weak spending growth and high vacancy rates.TOP INVESTMENT PICKS City center retail in high tourism markets Retail in high employment growth U.S.ma

194、rkets Hotels in tourism-driven markets in Asia Pacific and Europe92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24 2690955120125130*The retail rent affordability index is calculated using the volume of in-store retail sales per unit of retail space.ForecastOur forecast rental growth of a

195、bout 2.4%p.a.keeps afordability elevated relative to historyRetail rent afordability has been on an upward trajectorySources:CoStar,Oxford Economics,PGIM Real Estate.As of May 2024.Higher Affordability-6%-4%-2%0%2%4%6%8%Asia Pacific RetailU.S.RetailEurope RetailGlobal All PropertySources:MSCI,PGIM R

196、eal Estate.As of May 2024.Sources:Cushman&Wakefield,PGIM Real Estate.As of May 2024.-60%-50%-40%-30%-20%-10%0%10%20%30%40%50%San FranciscoSeattleNew YorkMiamiSan DiegoLos AngelesChicagoWashington,D.C.Palm BeachDublinBerlinBarcelonaMadridMunichAmsterdamParisLondonRomeMilanHong KongBris

197、baneSydneyMelbourneTokyoSeoulOsakaBeijingShanghaiSingaporeRetail rents have fallen in most major in-town retail markets globally,boosting afordabilityForecasts are not guaranteed and may not be a reliable indicator of future results.PGIM Real Estate|May 2024|REF:013208 Page 30 RETAIL AND HOTELS-25%-

198、20%-15%-10%-5%0%5%10%15%62232425Suburban Shopping MallsHigh Street RetailSources:JLL,PGIM Real Estate.As of May 2024.ForecastGrowth in tourist spending underpins the widening growth rates between prime high street and suburban retailSources:CoStar,PGIM Real Estate.As of May 202

199、4.Rent Growth:2024-282.5%2.0-2.5%2.0%SeattlePortlandBay AreaLos AngelesSan DiegoPhoenixDenverMinneapolisChicagoDallasAustinHoustonSouth FloridaTampaOrlandoNashvilleAtlantaCharlotteRaleighWashington,D.C.PhiladelphiaNew York/New JerseyBoston0204060800425262728RevPARHotel Demand T

200、otal Overnight StaysHotel Supply Number of RoomsSources:PMA,PGIM Real Estate.As of May 2024.A strong recovery in travel demand and subdued supply is feeding through into rapid growth in revenue per available room(RevPAR)RETAIL RENTAL GROWTH BY SEGMENT(%P.A.)RENT GROWTH BY MARKET(CAGR,2024-28)EUROPEA

201、N HOTEL DEMAND,SUPPLY AND REVPAR INDEX PERFORMANCE(2019=100)An improving economic backdrop is providing a recovery in discretionary spending by households and businesses.This is boosting the smaller,and still transforming,bricks and mortar retail sector with its emphasis on services over goods as it

202、 does wider leisure-related sectors,notably hotels.In the United States,the retail recovery is largely down to strong jobs growth feeding into strong retail sales growth,particularly across the South.Along with a retail supply shortfall,this has given rise to a wide differential rental outlook by ge

203、ography.Outside the United States,differences in the growth outlook and the extent of the e-commerce threat present differential opportunities across both Asia and Europe.Tourist-related markets feature high,with prime high street rents recovering strongly to pre-COVID levels,particularly in markets

204、 such as Hong Kong,Tokyo,Paris and London.The outlook is further enhanced by improving occupier affordability thanks to rising retail revenues.For hotels,the United States and parts of Europe have seen a pick-up in business-related travel but more so in Europe where this is feeding into a stronger R

205、evPAR growth outlook in markets like Frankfurt,Munich and Amsterdam.But both the United States and Europe are struggling with slower growth in domestic tourism as cost of living pressures bite.Markets linked to the rebound in international tourism offer the potential for a stronger hotel revenue upl

206、ift in the near term at least as hotel supply cannot keep pace.For Europe,cities in traditional tourist destinations such as Paris,Rome and Madrid stand out,whilst in Asia,destinations such as Hong Kong and Singapore are recording a strong post-COVID rebound but in line with a strong upward trend in

207、 international travel.Asia Pacific:Tourism rebound underpinning rental growth forecasts for prime high street locationsUnited States:Retail favors high-employment markets in the SouthEuropean hotels:Strong demand pick-up driving revenuesForecasts are not guaranteed and may not be a reliable indicato

208、r of future results.PGIM Real Estate|May 2024|REF:013208 Page 31 MODERN WORKPLACESOffices are still facing headwinds from hybrid working so there is a challenging backdrop for investing in the sector.Cities in the United States still have further to adjust,but low supply in CBD areas in Asia Pacific

209、 and Europe means rental growth is driving targeted opportunities.MSCI INDEX FORECAST TOTAL RETURNS BY SECTOR AND REGION(%P.A.)Key Points The outlook for the office market is hard to generalize.Overall,the economic outlook is improving but jobs growth,lagging activity as it does,remains subdued.Cost

210、 controls and revised expansion plans will continue to hit key office occupier groups over the rest of 2024.Office utilization rates remain low albeit improving.The shift to hybrid working continues to have a bigger impact in larger cities,particularly in Europe and the United States.But even then,t

211、here are large differences,with cultural,physical,sectoral and legal factors impacting its significance.It still makes for a challenging investment opportunity.In each region,weve seen the same pattern:rising vacancy and lower real rental growth.For the United States where vacancy rates in CBD areas

212、 of major cities have more than doubled,rents are falling and values are still adjusting exacerbated by limited liquidity on the back of this challenging market picture.The correction of rents and values has further to go and near-term downside risks are high.TOP INVESTMENT PICKS European low supply

213、 CBD office markets Developed Asia Pacific CBD office markets Value-add plays to reposition older stock in Europe and Asia PacificCOMMON GLOBAL THEME:Rising vacancy limits office rental growth potential-10%-5%0%5%10%U.S.OfficeEurope OfficeAsia Pacific OfficeGlobal All PropertySources:MSCI,PGIM Real

214、Estate.As of May 2024.OFFICE VACANCY RATE VS.ANNUAL REAL RENTAL GROWTH BY REGIONUNITED STATESEUROPEASIA PACIFICVacancy RateAnnual Real Rental Growth(+1Y)Vacancy RateAnnual Real Rental Growth(+1Y)Vacancy RateAnnual Real Rental Growth(+1Y)-25%-20%-15%-10%-5%0%5%10%15%20%25%3%5%7%9%11%13%15%

215、-25%-20%-15%-10%-5%0%5%10%15%20%25%3%5%7%9%11%13%15%-25%-20%-15%-10%-5%0%5%10%15%20%25%3%5%7%9%11%13%15%20192019End 23End 23End 232019Low vacancy,positive real rental growthHigh vacancy,negative real rental growthSources:CoStar,Cushman&Wakefield,JLL,PMA,PGIM Real Estate.As of May 2024.In contras

216、t,CBD office markets in Europe and parts of Asia are reporting rental growth.The shift in vacancy has been relatively small and tenant demand has been strong in central locations,with ESG factors also playing a role,driving a push for modern,efficient space that is often located in CBDs rather than

217、suburban areas.An occupier retreat to quality a time-tested pattern of occupier demand will continue to play out.Forecasts are not guaranteed and may not be a reliable indicator of future results.PGIM Real Estate|May 2024|REF:013208 Page 32 CBD OFFICESViennaParisBerlinFrankfurtMunichMilanRomeAmsterd

218、amBarcelonaMadridStockholmLondonManchesterR=0.6273-2.0%-1.5%-1.0%-0.5%0.0%0.5%1.0%1.5%2.0%2.5%3.0%-1.0%-0.5%0.0%0.5%1.0%1.5%2.0%2.5%Productivity GrowthProductivity growth drives real rental growth across citiesForecast-2%-1%0%1%2%3%4%5%6%7%920227CBD MarketsNon-CBD/Secondary Sub

219、marketsIn Europe,the rental growth outlook for ofces is much stronger for well-located CBD marketsForecast0%1%2%3%4%5%6%7%425262728CBDNon-CBDSources:JLL,PGIM Real Estate.As of May 2024.CBD rental growth is set to outpace non-CBD locations in major Australian citiesCITY OFFICE PRODUCTIVITY

220、 GROWTH VS.OFFICE REAL RENTAL GROWTH BY CITY(2003 2023)EUROPEAN OFFICE PRIME RENTAL GROWTH(%)AUSTRALIA OFFICE EFFECTIVE RENTAL GROWTH CBD VS.NON-CBD(%P.A.)Globally,European office markets offer the most comprehensive investment opportunities in the office sector thanks to:Scale of the investment mar

221、ket across major cities.A relatively limited pick-up in vacancy,along with a low supply pipeline.Many markets are either existing hybrid-driven(e.g.Amsterdam,Stockholm)or are demonstrating resistance to remote working(e.g.Milan,Frankfurt,Munich,Madrid),limiting the impact on occupier demand.An ESG f

222、ocus among occupiers and owners that supports demand for high-quality office stock(at the expense of older,poorly located space).Moreover in what is still a tough occupier environment the flight to quality in a more productivity-driven office space recovery is playing out with CBD rental growth expe

223、cted to continue to outpace non-CBD locations.Such a scenario points to high employment share cities(e.g.Stockholm and London)providing income resiliency alongside the potential for higher rental growth linked to productivity gains.A similar story is playing out in Australia where jobs growth is sup

224、porting economic activity and with it a clear shift to CBD office locations.CBD rental growth is set to outpace non-CBD in Sydney,Melbourne and Brisbane to at least 2028.Australia is another example of offering resilient growth given the jobs growth dynamics.Europe:Office productivity driving rental

225、 growth in central business districtsAsia Pacific also seeing divergence by quality of assetForecasts are not guaranteed and may not be a reliable indicator of future results.Sources:Oxford Economics,PMA,Cushman&Wakefield,PGIM Real Estate.As of May 2024.Cities such as Seoul and Singapore are per

226、forming better than Sydney,for instance,offering higher near-term rental growth,since more productivity-driven rental growth is more cyclical and investment timing is more important.PGIM Real Estate|May 2024|REF:013208 Page 33 FUNDING GAPA significant volume of commercial real estate loans maturing

227、sets the stage for a surge in refinances,with alternative lenders poised to capitalize as banks and CMBS face regulatory and market constraints.U.S.BANKS COMPOSITION OF COMMERCIAL REAL ESTATE ASSETS(%)AUSTRALIAN AUTHORIZED DEPOSIT-TAKING INSTITUTIONS(ADIS)COMMERCIAL REAL ESTATE EXPOSURE LIMITS BY IN

228、VESTOR GROUPS(AU$BILLIONS)Key Points A lot of debt is due to roll over in the next few years,and there will be opportunities for nonbank lenders.As interest rates decline,debt financing becomes more viable and accretive to transactions.Concurrently,rental growth is poised to surpass historical avera

229、ges,increasing cash flows and improving debt service coverage.Additionally,value growth expected after 2024,from rental growth and some mild yield compression,will improve loan-to-value(LTV)ratios on existing debt.Together these will strengthen credit and enhance equity cushions,yielding a better ba

230、lance of risk and reward on CRE debt investments TOP INVESTMENT PICKS Lending into funding gaps Gap financing Development financeCOMMON GLOBAL THEME:Significant debt rollovers dueESTIMATED REAL ESTATE LOAN MATURITIES(US$BILLIONS)02004006008001,0001,2001,4001,6002425262728United StatesEuropeDeveloped

231、 Asia PacificSources:Mortgage Bankers Association,AFME,ECB,Cushman&Wakefield,MSCI,Bayes Business School,IREBS,IEIF,APRA,PGIM Real Estate.As of May 2024.A signifcant volume of debt is set to mature globally in the next few years0%20%40%60%80%100%8487909396990205086Nonfarm Nonresidentia

232、lConstruction&DevelopmentMultifamilySources:FDIC,PGIM Real Estate.As of May 2024.005006000809512223Major BanksOther Domestic BanksForeign Subsidiary BanksForeign Branch BanksOtherSources:APRA,PGIM Real Estate.As of May 2024.Banks market share is declining in Aust

233、raliaU.S.banks are expected to continue reducing assets in construction and development,which is subject to higher regulatory capital charges under the Basel framework.Major Australian banks are increasing CRE exposure limits at a slower pace than other lenders,reducing market share further,from a h

234、igh of 70%to 60%.Minimal growth in land development exposure limits is expected to persist.U.S.banks pulling back from construction financeNonbank lenders gaining market share in AustraliaForecasts are not guaranteed and may not be a reliable indicator of future results.PGIM Real Estate|May 2024|REF

235、:013208 Page 34 2024 GLOBAL OUTLOOKINVESTMENT RESEARCH TEAMGreg Kane Executive Director Head of European Investment Research Florian Richter Vice President Matthew Huen,CFASenior Associate Natasha Lee Vice PYiwen Chen A Henri Vuong Executive Director Head of Real Estate Debt Investment Research EURO

236、PEASIA PACIFICDEBTAMERICASLee Menifee Managing Director Head of Americas Investment Research Margaret HarbaughExecutive DBradley Doremus,CFA Vice President Dean Joseph Deonaldo Senior Associate Yvonne White DRoberta SegarraATre McMillan Analyst Peter Hayes,PhDManaging Director Global Head of Investm

237、ent Research GLOBALPGIM Real Estate|May 2024|REF:013208 Page 35 2024 GLOBAL OUTLOOKDISCLOSURESImportant informationFor Professional and Institutional Investors only.All investments involve risk,including the possible loss of capital.Past performance and target returns are not a guarantee and may not

238、 be a reliable indicator of future results.PGIM Real Estate is the real estate investment management business of PGIM,the principal asset management business of Prudential Financial,Inc.(“PFI”),a company incorporated and with its principal place of business in the United States.PGIM is a trading nam

239、e of PGIM,Inc.and its global subsidiaries.PGIM,Inc.is an investment adviser registered with the U.S.Securities and Exchange Commission(the“SEC”).Registration with the SEC does not imply a certain level of skill or training.PFI of the United States is not affiliated in any manner with Prudential plc,

240、incorporated in the United Kingdom or with Prudential Assurance Company,a subsidiary of M&G plc,incorporated in the United Kingdom.Prudential,PGIM,their respective logos and the Rock symbol are service marks of PFI and its related entities,registered in many jurisdictions worldwide.In the United

241、 Kingdom,information is issued by PGIM Private Alternatives(UK)Limited with registered office:Grand Buildings,1-3 Strand,Trafalgar Square,London,WC2N 5HR.PGIM Private Alternatives(UK)Limited is authorised and regulated by the Financial Conduct Authority(“FCA”)of the United Kingdom(Firm Reference Num

242、ber 181389).These materials are issued by PGIM Private Alternatives(UK)Limited to persons who are professional clients as defined under the rules of the FCA.In the European Economic Area(“EEA”),information is issued by PGIM Luxembourg S.A.with registered office:2,boulevard de la Foire,L1528 Luxembou

243、rg.PGIM Luxembourg S.A.is authorized and regulated by the Commission de Surveillance du Sector Financier in Luxembourg(registration number A00001218)and operating on the basis of a European passport.In certain EEA countries,this information,where permitted,may be presented by either PGIM Private Alt

244、ernatives(UK)Limited or PGIM Limited in reliance of provisions,exemptions,or licenses available to either PGIM Private Alternatives(UK)Limited or PGIM Limited under temporary permission arrangements following the exit of the United Kingdom from the European Union.PGIM Limited and PGIM Private Altern

245、atives(UK)Limited have their registered offices at:Grand Buildings,1-3 Strand,Trafalgar Square,London WC2N 5HR.PGIM Limited is authorized and regulated by the Financial Conduct Authority(“FCA”)of the United Kingdom(Firm Reference Number:193418).PGIM Private Alternatives(UK)Limited is authorized and

246、regulated by the Financial Conduct Authority(“FCA”)of the United Kingdom(Firm Reference Number:181389).These materials are issued by PGIM Luxembourg S.A.,PGIM Limited or PGIM Private Alternatives(UK)Limited to persons who are professional clients as defined in the relevant local implementation of Di

247、rective 2014/65/EU(MiFID II)and/or to persons who are professional clients as defined under the rules of the FCA.PGIM operates in various jurisdictions worldwide and distributes materials and/or products to qualified professional investors through its registered affiliates including,but not limited

248、to:PGIM Real Estate(Japan)Ltd.in Japan;PGIM(Hong Kong)Limited in Hong Kong;PGIM(Singapore)Pte.Ltd.in Singapore;PGIM(Australia)Pty Ltd in Australia;PGIM Luxembourg S.A.,and PGIM Real Estate Germany AG in Germany.For more information,please visit .GENERAL/CONFLICTS OF INTERESTThese materials represent

249、 the views,opinions and recommendations of the author(s)regarding the economic conditions,asset classes,securities,issuers or financial instruments referenced herein.Distribution of this information to any person other than the person to whom it was originally delivered and to such persons advisers

250、is unauthorized,and any reproduction of these materials,in whole or in part,or the divulgence of any of the contents hereof,without prior consent of PGIM Real Estate is prohibited.Certain information contained herein has been obtained from sources that PGIM Real Estate believes to be reliable as of

251、the date presented;however,PGIM Real Estate cannot guarantee the accuracy of such information,assure its completeness,or warrant such information will not be changed.The information contained herein is current as of the date of issuance(or such earlier date as referenced herein)and is subject to cha

252、nge without notice.PGIM Real Estate has no obligation to update any or all of such information;nor do we make any express or implied warranties or representations as to the completeness or accuracy or accept responsibility for errors.These materials are not intended as an offer or solicitation with

253、respect to the purchase or sale of any security or other financial instrument or any investment management services and should not be used as the basis for any investment decision.Past performance is no guarantee or reliable indicator of future results.No liability whatsoever is accepted for any los

254、s(whether direct,indirect,or consequential)that may arise from any use of the information contained in or derived from this report.PGIM Real Estate and its affiliates may make investment decisions that are inconsistent with the recommendations or views expressed herein,including for proprietary acco

255、unts of PGIM Real Estate or its affiliates.The opinions and recommendations herein do not take into account individual client circumstances,objectives,or needs and are not intended as recommendations of particular securities,financial instruments or strategies to particular clients or prospects.No d

256、etermination has been made regarding the suitability of any securities,financial instruments or strategies for particular clients or prospects.For any securities or financial instruments mentioned herein,the recipient(s)of this report must make its own independent decisions.Conflicts of Interest:Key

257、 research team staff may be participating voting members of certain PGIM Real Estate fund and/or product investment committees with respect to decisions made on underlying investments or transactions.In addition,research personnel may receive incentive compensation based upon the overall performance

258、 of the organization itself and certain investment funds or products.At the date of issue,PGIM Real Estate and/or affiliates may be buying,selling,or holding significant positions in real estate,including publicly traded real estate securities.PGIM Real Estate affiliates may develop and publish rese

259、arch that is independent of,and different than,the recommendations contained herein.PGIM Real Estate personnel other than the author(s),such as sales,marketing and trading personnel,may provide oral or written market commentary or ideas to PGIM Real Estates clients or prospects or proprietary invest

260、ment ideas that differ from the views expressed herein.Additional information regarding actual and potential conflicts of interest is available in Part 2 of PGIMs Form ADV.PGIM Real Estate|May 2024|REF:013208 Page 36 2024 GLOBAL OUTLOOKINFORMATIONAL PURPOSESThese materials are for informational or e

261、ducational purposes.In providing these materials,PGIM(i)is not acting as your fiduciary and is not giving advice in a fiduciary capacity and(ii)is not undertaking to provide impartial investment advice as PGIM will receive compensation for its investment management services.These materials do not ta

262、ke into account the investment objectives or financial situation of any client or prospective clients.Clients seeking information regarding their particular investment needs should contact their financial professional.The information contained herein is provided on the basis and subject to the expla

263、nations,caveats and warnings set out in this notice and elsewhere herein.Any discussion of risk management is intended to describe PGIM Real Estates efforts to monitor and manage risk but does not imply low risk.These materials do not purport to provide any legal,tax or accounting advice.These mater

264、ials are not intended for distribution to or use by any person in any jurisdiction where such distribution would be contrary to local law or regulation.INDEX DEFINITIONSThe financial indices referenced herein as benchmarks are provided for informational purposes only.The holdings and portfolio chara

265、cteristics is expected to differ from those of the benchmark(s),and such differences may be material.Factors affecting portfolio performance that do not affect benchmark performance may include portfolio rebalancing,the timing of cash flows,credit quality,diversification and differences in volatilit

266、y.In addition,financial indices do not reflect the impact of fees,applicable taxes or trading costs which reduce returns.Unless otherwise noted,financial indices assume reinvestment of dividends.You cannot make a direct investment in an index.The statistical data regarding such indices has not been

267、independently verified by PGIM Real Estate.The MSCI Global Annual Property Index(Unfrozen;Weighting:Market Size)measures unlevered total returns of directly held property investments from one valuation to the next.The index tracks performance of 55,862 property investments,with a total capital value of USD 1,977.1 billion as at December 2023.This MSCI regional composite index is market weighted based on MSCIs market size estimate of the professionally managed real estate investment market.