Hines’ Mid-Year Outlook: Global Shocks Provide Generational Opportunity for Those Who Know Where to Look

• New research from global real estate investment manager Hines predicts cap rate compression is here for the long term as global tumult creates a 1970s style twin-peak inflation cycle
• The firm’s 2025 Global Mid-Year Outlook shows real estate set for period of accelerated growth, as conditions repeat favorable 16-year period for the sector last occurring between 1966-82

New analysis released today by Hines, the global real estate investment manager, shows global markets waking up to a new reality as the first half of 2025 is punctuated by tariff shocks, inflation persistence, rising yields on longer-term bonds, and growth downgrades.

The latest iteration of the Outlook uses the firm’s 40 years of historic data to draw comparisons with the 1970s, where U.S. inflation rose to its first peak over the first 26 months of each cycle, easing over the following 26 months, and then rose again over the following 40 months.

David Steinbach, Chief Investment Officer at Hines believes today’s market conditions represent a similarly generational moment for capital deployment in real estate:

“Through the 70s and into the early 80s real estate performance accelerated due to income growth driven by scarcity, discipline, and rising replacement costs. Today, global construction has fallen off compared to historic averages, yet demand has remained. That supply and demand mismatch is not hypothetical. It’s currently being baked into the back half of this decade. In the immediate moment, these forces represent an uncommon buying opportunity.”

According to Steinbach, it is the key themes of deglobalization, deleveraging, demographics, dispersion, data, and decarbonization that will inform Hines’ high conviction investment themes over the next cycle:

“These are structural forces that we believe will shape the investment landscape for years to come. Our key near-term conviction remains living, where we are deploying the most capital. We continue to lean in on retail, where the resurgence is maintaining its momentum, and U.S. office credit, which is attractive as loans mature and owners begin to become sellers.”

Hines has consistently predicted that this cycle would be marked by a steady recalibration of valuations with fundamentals reasserting themselves. And that private real estate would emerge as one of the few places where long-term capital could find income, resilience, and strong relative value. A view that continues through this latest Mid-Year Outlook.

Digging into the data, Joshua Scoville, Head of Global Research at Hines said:

“Looking back, the exponential rent growth during the period of rising cap rates in the 70s was remarkable. If history repeats, experience suggests that real estate has the potential to significantly outperform. How real estate derives returns may fundamentally differ from the last 40 years, but the oldest asset class in the world has historically thrived in many differing rate environments.”

About Hines

Hines is a leading global real estate investment manager. We own and operate $90.1 billion¹ of assets across property types and on behalf of a diverse group of institutional and private wealth clients. Every day, our 5,000 employees in 30 countries draw on our 68-year history to build the world forward by investing in, developing, and managing some of the world’s best real estate. To learn more, visit www.hines.com and follow @Hines on social media.

¹Includes both the global Hines organization and RIA AUM as of December 31, 2024.

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