Global real estate performance remained strong in the first quarter. Investment activity pulled back slightly from the record high at the end of 2021 and the pace of cap rate and yield compression eased. The war in Ukraine is curbing economic growth, boosting inflation and is expected to have a cooling impact on real estate returns.
As restrictions due to COVID-19 gradually fade away and life returns to pre-pandemic-like conditions, apart from China and Hong Kong where new lockdowns have been imposed, the global economy faces new challenges. The unexpected war in Ukraine has rocked the international order and had a big impact on energy and agricultural markets and on specialist products produced by Russia and Ukraine. The war is expected to curb economic growth in the advanced economies by up to one percentage point this year, with Europe the most affected. For example, in April the IMF downgraded its growth forecast for 2022 for the advanced economies to 3.3% from 3.9% in January and further downgrades look likely.