There are two major economic stories that will color the real estate investment backdrop in every major market: the U.S. taper and the China rebalancing.
As we suggested in the last Global Vision, the U.S. is the first major market to enter a sustained economic recovery and, therefore, the first to normalize interest rates. Despite Washington’s shutdown and the inactivity on the debt ceiling, we believe that this will pass, and with Bernanke’s warning of a QE tapering as soon as this quarter, bond markets and most commentators are now pricing in a first rise in the policy rate in 2015. This expectation has pushed up the bond yield curve, with the result that 10 year bond yields are a percentage point higher than in Q2, and Moody’s Analytics is forecasting that they will rise to 5% in 2016.
Source : CBRE Global Investors