The real deal with real estate deals

Real estate deal activity plunged below historical averages in 2023. Pandemic-related demand uncertainty, declining rent growth, and elevated financing costs drove up capitalization rates and weighed down deal volume, say senior partners Alastair Green and Aditya Sanghvi and coauthors. Global real estate deal volume hit a ten-year low after plummeting 47 percent from 2022 levels to $650 billion.

Global real estate deal volume fell 47 percent between 2022 and 2023.

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An area graph shows the global real estate volume from 2014 to 2023, measured in billions of dollars. The data are segmented into 3 regions: the Americas; Europe, the Middle East, and Africa; and Asia–Pacific. House prices show a sudden spike in 2021, during the COVID-19 pandemic, to ~$1.5 trillion globally, before a precipitous fall in 2022 and again in 2023, to about half of the 2021 volume. By region, 2022 to 2023 saw a drop of 29.2% for Asia–Pacific; a drop of 45.9% for Europe, the Middle East, and Africa; and a drop of 50.2% for the Americas. The total percentage change for 2022 to 2023 is ~46.7%.

Source: CBRE; Real Capital Analytics.

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To read the report, see “McKinsey Global Private Markets Review 2024: Private markets in a slower era,” March 28, 2024.