Total annual returns from institutional-quality direct real estate investments for the apartment, retail, industrial and office sectors combined are forecast to be 9.5 percent in 2013, 9.0 percent in 2014 and 8.0 percent in 2015, continuing a downward trend that started last year, but remaining in the range of long-term historical averages.Steady Improvement Expected The projections for real estate are based on a generally favorable outlook for the economy; steady improvement is anticipated for both economic growth and employment. According to the latest forecast, the real gross domestic product (GDP) is expected to rise by 2 percent this year, by 3 percent in 2014, and then rise by 3.1 percent in 2015; while the nation's unemployment rate is expected to drop to 7.5 percent by the end of the year, then slip further to 7.0 percent by the end of 2014 and to 6.5 percent by the end of 2015. The number of jobs created is expected to rise by 2.1 million in 2013, 2.4 million in 2014 and 2.6 million in 2015. All of these forecasts are more optimistic than those in the September 2012 survey. "The survey suggests that despite some tapering off of price increases and returns, the commercial real estate industry will, in general, be on solid footing for the next three years," said ULI Senior Vice President Dean Schwanke, executive director of the ULI Center for Capital Markets and Real Estate. "After a prolonged period of uncertainty, we're seeing a revival of investor confidence as the economy continues to recover." Howard Roth, Ernst & Young's global real estate leader, points out that although the U.S. real estate market still has some way to go, it is certainly pointed in the right direction and is very likely to continue attracting investors. "Institutional global capital is searching for a home that provides the best risk adjusted return, without regard for borders. As the consensus of the economists participating in our survey confirms, the U.S. capital markets, the housing sector, and commercial real estate fundamentals are clearly improving, trends which we believe places the U.S. real estate sector squarely in the sights of global investors for the foreseeable future," said Roth. Single Family Values and Inflation Both Expected to Rise The March survey reinforces the current optimism regarding the single-family housing industry. Single-family housing starts, which reached near-record lows over between 2009 and 2011, are projected to reach 700,000 in 2013 (up from 535,300 in 2012), and then rise to 900,000 in 2014, and 1.013 million in 2015. The national average home price is expected to rise by 6.0 percent this year, then slip to 5.3 percent in 2014 and 5.0 percent in 2015, staying at a level that, despite the moderation, is well above previous projections. This reflects signs of a solid housing recovery, as buyers, sensing a turning point, return to the market.