Oxford Economics Cuts Global CRE Capital Growth Forecasts

Oxford Economics has cut its global commercial real estate capital growth forecasts for 2026 due to the conflict in the Middle East, the UK-based firm said in a report released today. Certain sectors and regions are expected to bear the brunt more than others.

“Despite the fragile ceasefire, the energy market disruption and infrastructure damage that’s happened will hit economic growth, curtailing rental growth, and higher bond yields will dent CRE’s relative attractiveness,” wrote Mark Unsworth, director of global real estate economics at Oxford Economics, and author of the report. Europe and Asia-Pacific will be more severely affected than the U.S. due to their reliance on Middle Eastern energy imports, particularly natural gas, he wrote.

That being said, Unsworth includes logistics and residential among the property sectors most sensitive to household income and consumption, along with retail. These will be the hardest hit in an environment “where inflation will be harder to pass on, whether from businesses to consumers or landlords to tenants.”

Longer term, Unsworth wrote, “We expect a catch-up in ‘lost capital growth’ in subsequent years, leaving our five-year outlook broadly unchanged. Any change to the likely duration of the war may lead to further forecast revisions.”