Mid-Year Pulse: Global Investors on the Economy, Energy, and Housing

Especially because the real estate “point of view” is not immediately tied to contemporaneity but instead poised to balance the realities of current events and trends alongside longer-term theses for suitable returns.

And since the founding of AFIRE in the late 1980s, the world has operated a seemingly predictable and mostly stable global economic order, such that sentiments expressed over any multi-year period over the past three decades were originating from a consistent economic and political context. But now, this global order is facing a reformation—or what historians William Strauss and Neil Howe have dubbed “the fourth turning,” in alignment with their “generational theory” of American history which posits that social change follows a cyclical historical dynamic (at least, in the US).

In his latest book, The Fourth Turning is Here, published in 2023 and expounding on his Americo-centric historical theory, Howe writes: “Every Fourth Turning unleashes social forces that push the nation, before the era is over, into a great national challenge: a single urgent test or threat that will draw all other problems into it and require the extraordinary mobilization.”[1] And as anyone paying attention to geopolitics and foreign policy will note: it’s clear that nations around the world are facing their own great national challenges—including America.

CHALLENGED DEMOCRACIES

As Howe and other historians and analysts have noted: America has largely retracted the strands of soft power it has used to maintain its place of global prominence (especially in the West) in the post-Cold War order.

And meanwhile, active war fronts in Israel and Ukraine are simultaneously hot points of old conflagrations, and proxy arenas for the state, corporate, and ideological entities currently positioned behind the defenders or aggressors in these keystone regions—which ultimately represent the foundational tension between democracy and authoritarianism.

Although fragile and imperfect, representative democracy both empowers and is powered by regulated systems of free trade, allowing for lower barriers to foreign investment and subsequent opportunity for investment, partnership, and development—especially in real estate.

But as global representative democracies falter, free trade and foreign investment are impacted in kind. And as stated plainly in the latest “Democracy Index,” produced by the Economist Intelligence Unit (EIU) and released at the beginning of 2025: democracy isn’t working.[2]

The EIU’s Democracy Index assigns democratic scores to countries based on five inputs: electoral process and pluralism, functioning of government, political participation, political culture, and civil liberties.

According to the latest report (as detailed in Exhibit 1), only 15% of the world’s countries (covering only 6.6% of the global population) are now categorized as “full democracies.”

Hybrid regimes (21.6%) and flawed democracies (27.5%), including the US, represent the majority of countries (49.1%), but authoritarian regimes—which result from hybrid regimes—account for nearly 36% of all governments tracked in the index, and almost 40% of the global population.[3] And as global disaffection with full democracy is expected to continue its decline, it’s likely that the number of flawed, hybrid, and authoritarian regimes will grow in kind.

Conducting a survey on global investor sentiment in this context therefore presents a unique challenge, because the very paradigm of foreign investment is evolving in kind. The contradictions AFIRE has captured in economic outlooks from our survey respondents underscores the complexities of this evolution.

ECONOMIC CONTRADICTIONS

In the survey AFIRE conducted at the beginning of 2025, less than a third of respondents (27%) forecasted that the US economy was on track to a recovery within the next 12–18 months. Yet, when asking to opine on this same question in the most recent survey, concluded in August 2025, that optimistic view grew to 47%—but so did the number of “unsure,” which grew to 44% (Exhibit 2).

This contradiction is underscored in a series of agree/disagree statements listed in the survey (Exhibit 3). There was a precise 50/50 split for those who agreed or disagreed with the statement that there will be a decrease in foreign investment into US real estate in the next year. So perhaps it is more telling that nearly 80% of respondents disagree (or are unsure about) a resultant increase in foreign investment on this same timeline.

Meanwhile, a majority (56%) disagrees with the notion that the US will see increased real estate divestment and largely agrees (84%) that foreign investors will be more likely to remain in a hold pattern on their US real estate investments until conditions stabilize.

For those who indicated a positive or negative response to their overall US economic outlook, the survey also asked them to assess their view of the US economy relative to all other global regions (Exhibit 4). Encouragingly, the US still has a relatively positive view (62.5%), though a third of respondents have either a neutral (25%) or negative view (12.5%) of the same.

Those who hold a positive view of the US economy are citing GDP, interest rates, and labor and employment trends as that basis for their economic outlook, whereas those with a negative view are citing inflation metrics and the general political environment as cause for concern.

(It should be noted that this survey was concluded around the same time Donald Trump fired Erika McEntarfer, head of the Bureau of Labor Statistics, which has otherwise been an apolitical source of US employment data, thus calling into question the future reliability of US employment data as a meaningful basis for economic opinion.)

In general, whether their views are positive or negative, respondents indicate that interest rates, tariffs, and general geopolitical dynamics will continue to color investor opinions of US real estate over the next year (Exhibit 5).

In this context of concern across these three key areas (interest rates, tariffs, and geopolitics), respondents are expecting some meaningful changes in how global investors will be approaching US real estate investment over the next 12–18 months (Exhibit 6).

Some percentage of respondents are expecting modest increases in US investment—especially in the Middle East (52%) and the APAC region (47%), with more modest increases expected from Europe and Central and South America. But decreases are forecasted across the board, with 60% of respondents looking at Canada for the largest decrease, followed by 50% of respondents forecasting the same for Europe.

Broadly, the economic outlook from the survey respondents belies a larger global narrative of contradiction that goes beyond real estate. Depending on your point of view as an investor, a “fourth turning” could be a benefit, could be a detriment, or could be fuel to focus on more practical solutions to real estate investment health.

CONTINUING THE ENERGY CONVERSATION

Chief among pressing practical issues in commercial real estate is the ongoing renewable energy transition, which is continuing apace despite the otherwise disingenuous influence of a diminishing pro-carbon sect.

Which is to say, even though fossil fuels still account for nearly 60% of global electricity generation, the annual electricity capacity of renewables increased by around 2,600 gigawatts between 2015 and 2024—a 140% increase against the 640 gigawatt (16%) increase in fossil fuel capacity creation during this same period.[4]

While 58% of respondents are not currently invested in assets or projects focused on the energy transition, the other 42% are either exploring or actively invested in the space (Exhibit 7).

According to a recent report from PwC, there are three primary ways long-term investors are involved in such projects.[5]

Trailblazers use their resources to rethink energy projects, develop innovative solutions, and execute those solutions.

Whole-of-life investors hold energy assets and projects for their entire life cycles, planning for changes in risk-adjusted returns over time.

And the blended-finance approach allows long-term investors to enter into public-private and other partnerships to distribute risk.

Nearly half of the respondents (46%) are involved in blended approaches to the energy transition, in accordance with the more conservative approach to risk taken by institutions.

But the trailblazing and whole-of-life approach are both particularly suited to institutional investors (especially sovereign wealth funds and public pension funds), because assets can often be difficult to move from fund to fund for asset managers, whereas the investors themselves can own energy-transition assets for their entire lifecycle.

But despite the fact that 58% of respondents are not involved in renewable energy projects or assets, more than 85% of all respondents recognize the importance of energy availability in their general due diligence and valuation processes (Exhibit 8). And such energy considerations are only expected to increase over the next few years (Exhibit 9).

Similarly, 22% of respondents are working with local municipalities and utilities to ensure that their assets have access to reliable energy sources, with 48% engaging with these groups depending on the sort of assets being invested in or developed (Exhibit 10).

It’s likely that the investors who are already engaged with their energy authorities will be able to have some autonomy in the continued evolution of the energy markets.

Various state and federal solutions to the energy transition have been well documented (even if the current US federal administration is critical of such solutions), but investors have indicated what they can do themselves to advance this transition, with or without public support or subsidy.

For example, as shown in Exhibit 11, nearly a third (30%) of investors cite their own rationale for product choice or design to be integral in the transition effort, similarly looking to the private market to reflect their influence or preference (22%).

These same organizations may also have their own internal energy or decarbonization targets (20%) and are designing their portfolios accordingly (16%). Perhaps surprisingly, lobbying only accounts for 5% of more effective investor-guided solutions.

HOUSING AVAILABILITY AND AFFORDABILITY

Similar to the challenges of the energy transition, the housing availability and affordability crisis in the US is well-understood by investors. Nonetheless, it remains a persistent and critical issue for ongoing investment opportunity in the US.

As detailed in Exhibit 12, nearly 90% of the AFIRE survey respondents are invested in housing assets, with 60% of those invested in some form of multifamily or mixed-use projects. Single-family rentals comprise around 22% of respondents’ housing assets, and the other 18% generally include student housing, senior housing, and others.

Nearly 30% of housing investors in the survey are majority focused on housing (accounting for between 85% and 100% of their portfolios), but most respondents include housing in their broader mix.

And not surprisingly, most institutional portfolios that include housing are focused on Sunbelt and coastal regions, with only 8% holding housing investments in the American Midwest. But depending on the other trends at play—including migration, demographic shifts, affordability issues, and climate challenges—these weights are likely to shift in the coming years.

Meanwhile, a confluence of practical, political, and economic factors continues to inhibit a much-needed US housing boom. Putting aside the obvious inflationary levers being aggravated by Trump administration policies—including high tariff rates, restrictive immigration and travel policies, and a rapidly cooling job market—investors are pointing to various federal- and state-level solutions that could help accelerate new housing creation in the US (Exhibit 13).

At the federal level, nearly 70% of investors would like to see improved building code requirements to allow for the creation of more housing (such as micro-apartments) and construction types (such as tall-building timber construction). Additionally, low to no tariffs on common building materials and expanded finance tools and products could alleviate heightened costs for occupants and developers alike.

And at the state level, nearly 80% of investors believe increased incentives (e.g., density bonuses, tax abatements, etc.) and reformed laws around zoning (62%) and planning and review processes (57%) could have a significant impact on housing creation in key regions. These findings are consistent with other recent in-depth research on the housing topic advanced by Up For Growth, a US-based member network committed to solving the housing shortage and affordability crisis, which posits that “without sustained and proactive efforts, the 3.85 million-unit housing deficit will continue to exacerbate economic inequality and limit opportunities for millions of people.”[6]

But investors are not without influence in housing, and are likewise citing public-private partnerships (78%), expanded relationships with local housing authorities and agencies (54%), and targeted investment allocations specifically for homebuilders and REITs focused on housing (33%) as important investor-controlled levers to alleviate the housing challenge (Exhibit 14).

While some of these proposed solutions may seem obvious, when weighed against some of the other challenges and contradictions mapped in the AFIRE survey, it’s likely that few constructive actions will be taken—if any—amidst the ongoing economic uncertainty in the US (and accordingly, most of the world).

AN ALTERED FUTURE

At the time of this writing, the majority of economists have raised flags about the state of the US economy. Mark Zandi, chief economist for Moody’s (and one of the speakers at the AFIRE Annual Member Meeting in September 2025) recently stated, “based on my assessment of various data, states making up nearly a third of US GDP are either in or at high risk of recession, another third are just holding steady, and the remaining third are growing.”[vi]

He goes on to say that Southern states are currently faring the best (consistent with how AFIRE investors have focused their housing investments), but their growth is slowing. “California and New York, which together account for over a fifth of US GDP, are holding their own, and their stability is crucial for the national economy to avoid a downturn.” Reneging the tariffs would do a lot to alleviate these negative trends, but must ultimately be weighed against the broader global shift currently underway. In this context, investors are doing their best to mitigate contradictions—even if that means simply finding calm in rough waters.

But if, as Neil Howe argues, the end of one historical cycle is already here, the only way out may be through.

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Note from the Editor: Issue #19

Mid-Year Pulse: Global Investors on the Economy, Energy, and Housing

Benjamin van Loon | AFIRE

Bend, Not Break: Investing in Real Estate Amid Economic Uncertainty

John Murray + François Trausch + Russell Gannaway + Kirill Zavodov | PIMCO

Test Of Time: How US Real Estate Withstands an Uncertain Investment Market

Riaz Cassum | JLL

Oh Canada: Why International Investors Might Want a Second Look at Canadian Real Estate Markets

Amy Erixon + Long Tang + Daniel Goldberg + Marie-France Benoit | Avison Young

Beyond Oil: Why Gulf Family Offices Are Doubling Down on US Logistics, Data, and Housing

Abbas Hashmi | Saudi Family Holdings

South of the Border: Higher Yields and Growth in Mexican Industrial

Shaun Libou | Raymond James

Migration Myth: NIMBYism and Why Coastal Movers Aren’t Affecting Sunbelt Housing Supply

Donal Warde | Consultant + Ron Bekkerman | Constellation Data Labs

Machine Center: The AI-Driven Transformation of Data Center Investment

Sam Chandan | Chen Institute for Global Real Estate, NYU Stern School of Business

AI in Commercial Real Estate: A Practical Guide for Industry Leaders

Armel Traore Dit Nignan + Shaarvani Kavula | Principal Real Estate

Artificial Control: Are You Ready for AI Management and Oversight?

Marie-Noelle Brisson + Michael Savoie | CyberReady, LLC

Capitalizing on Dynamics: Demographic Mega-Trends Impacting CRE

Stewart Rubin | New York Life Real Estate Investors

Mid-Cap Assets: An Under-Examined Segment in CRE

Asaf Rosenheim | Profimex

The Lifestyle Renter: A Growing Opportunity for Strategic Investment in High-Quality Apartment Communities

Hannah Waldman | The Dermot Company

The Climate Is Speaking: CRE Underwriting for a Future That’s Listening

Ines Diez + Thomas Stanchak | Stoneweg

+ EDITOR’S NOTE

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