Interest rates remain low and real estate prices are hitting record highs in many countries while global economic growth is slowing. Meanwhile, political tensions around the world have not eased and climate change remains a long-term concern.

At the ULI Europe Conference earlier this month in Amsterdam, experts shared their takes on the global economic outlook and what developers and investors should watch for. Whether or not real estate markets are softening, speakers agreed that the world has undergone a paradigm shift since the global financial crisis.

Eri Mitsostergiou, director of European research at Savills, started the panel discussion on global capital markets with the question, “Are we at, close to, or past the peak?”

“Maybe in the European context we’re closer to the peak,” said Peter Ballon, managing director of the Canada Pension Plan Investment Board. “We think there are still opportunities to make money in real estate,” he said, citing the logistics sector and Brazil, India, and China. His organization was a net seller last year and expects to be a seller in 2020 as well. “Most people aren’t prepared for a downturn. Everyone is levered up, which might suggest we’re close to a peak,” he said.

“With regards to the U.S., the market is already softening, and it’s exciting to look into the market,” said Christoph Schumacher, global head of real estate at Credit Suisse Asset Management, mentioning Boston, Texas, and Washington, D.C., as markets of interest to his firm. “Being Swiss based, we’ve been on a peak for a while, and the returns have been low for a very long time. I wouldn’t be too pushy on Germany anymore; I would rather look into places such as Poland where we have a certain opportunity still to develop.”

Owen Thomas, chief executive officer of Boston Properties, disagreed. “I don’t think the U.S. is softening,” he said. “In our business, you focus on economic growth and the cost of capital. Economic growth isn’t buoyant, but it’s fine. The expense of raising capital is incredibly low, and Sri-Kumar predicted that rates will still go lower.”

Komal S. Sri-Kumar, president of macroeconomic consulting firm Sri-Kumar Global Strategies, and Hans Timmer, chief economist for South Asia at the World Bank, earlier in the conference had debated their respective outlooks on global geopolitics and macroeconomics.

Economists had predicted global growth of 2.9 percent for 2020, but that was before the coronavirus appeared in China. Sri-Kumar thinks growth will end up closer to 2 percent this year, but added, “I think we will have forgotten the coronavirus in 20 years.”

Sri-Kumar said the slow economic growth since the end of the recession was highly unusual: generally, a high growth rate can be expected after a trough.

“After every global crisis, the world is never the same again,” Timmer said. The global financial crisis struck as new digital technologies emerged that would fundamentally change how people work and invest.

“Real dynamism will be in Asia,” he said, with growing cities finding innovative solutions to the big problems of congestion and pollution. At the same time, Timmer said urbanization is not as important as it once was. “You don’t need to go to a city for productivity, but you do find quality of life there. Is that strong enough to continue the trend of urbanization? I’m not convinced.”

Along with climate change, the U.N.’s Sustainable Development Goals (SDG) were a frequent topic of discussion in Amsterdam.

Boston Properties primarily owns and operates office buildings in gateway cities, investing extensively to upgrade properties to be energy efficient, Thomas said. Increasingly, his company does not need to convince customers of the value of the upgrades.

Boston Properties built and operates the Salesforce Tower, the tallest building in San Francisco. The tenants “talk more about the LEED [Leadership in Energy and Environmental Design] stats than we do,” Thomas said. “Their talent cares about the kind of building they work in.” Investing in sustainability improvements often pays for itself, he said.

Ballon of the Canada Pension Plan Investment Board was less convinced. “I have yet to see the returns,” he said. “But our perspective is that it absolutely reduces risk. There’s no doubt in my mind that real estate that is not ESG-friendly [environmental, social, and governance] has a far higher risk profile.”

Serious market forces are at work in the area of sustainability that will push business leaders and investors to do the right thing, which will become “do the smart thing,” Thomas said. And Ballon said customer demand will push the free market to adapt more SDG principles.

But Schumacher said the European market is getting more pressure from government regulations introduced at the European Union, national, and municipal levels. “We need to see public bodies as a partner,” he said. “We can’t leave it all to the market in Europe.”

The office and logistics sectors are bright spots in many real estate markets, and investors have to think about the future of work.

“We’re in the middle of a revolution in jobs,” Thomas said. “Many traditional white-collar-job tasks are being automated. Traditional industries such as law, architecture, and finance—they are prosperous, but they’re not growing in terms of head count.” Tech, life sciences, and coworking have accounted for all absorption of office space this cycle, he said.