How can investors and occupiers adapt to a volatile world?

The immediate market consensus was that the tariffs would increase prices in the US and cause a fall in global GDP. Following a profound sell-off of US financial assets, President Trump's pain threshold appeared to be reached on 9 April, when he announced a 90-day pause on the most punitive of the ‘reciprocal’ tariffs (excluding China). Further concessions were made on electronics and automobiles, and on 12 May, the US and China agreed to roll back tariffs on one another for an initial 90-day period.

Uncertainty here to stay

So how do global trade and the economy move forward? Firstly, despite the temporary deal with China, the US average import tariff is still much higher than it was before 2 April, currently sitting at nearly 18%, according to the Budget Lab at Yale, up from 2.5% at the beginning of the year. Furthermore, the 90-day hiatus doesn’t remove the uncertainty but merely delays it. There is a desire to negotiate trade deals, but this normally takes years, not months. And uncertainty is bad for business; it makes it harder to plan for the future, which weighs on investment and employment decisions.

Uncertainty, however, is increasingly becoming the ‘modus operandi’ for businesses and investors. From the 1980s to the 2010s, the world enjoyed an unusual period of macroeconomic stability. But recent years have proven that this era of 'Great Moderation' is over, and we have now entered a new era of 'Great Volatility'. Already this year, we’ve seen wildfires engulf Southern California, continued violence in Ukraine, the Middle East, and now on the India-Pakistan border, and global stock market turbulence triggered by the aforementioned tariffs. Increased risk has become the “new normal”.

Against a backdrop of elevated risk, real estate investors often adopt a ‘wait-and-see’ approach. This may go some way to explaining why the recovery in capital markets faltered in the first quarter of this year, with the US$176 billion in global real estate investment representing a mere 2% increase on the year, according to MSCI RCA.

Real estate investment trends and opportunities

Geopolitical risk has deterred many cross-border investors in particular, along with large sectoral fundamental shifts and tough economic conditions. In recent years, this has left a vacuum in liquidity for higher valued assets. The share of cross border investment in 2025 to date, however, is at its highest since 2020. This aligns with improving fundamentals across each sector and falling interest rates. Increased geopolitical uncertainty may also push some investors to geographically diversify their assets.

Occupiers can also diversify to hedge against increased geopolitical risk. Ongoing logistical and geopolitical shocks are making businesses rethink their global supply chains with the overall aim of reducing their dependence on singular sources. This move to nearshore or reshore supply chains is similarly felt with regards to data infrastructure. With the increasing adoption of AI and cloud computing amidst growing concerns around cyber security, hyperscalers are expanding across different geographies as there is a growing conversation around national data sovereignty.

In a world increasingly defined by volatility and geopolitical fragmentation, both investors and occupiers are recalibrating their strategies and discovering new opportunities to remain competitive.