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Prince Amir Al Saud

Opportunities in the Global Real Estate Market

Opportunities in the Global Real Estate Market

 

Primary commercial and residential real estate markets worldwide are gaining some momentum after a long time during the present cycle. For instance, growth in leasing activities has complemented investment flow. At the same time, the volume of office space leasing increased to the highest during the last three years. Buyers of residential properties and investor appetite have not waned despite signs of economic volatility in different countries.

Investment Activity

Investments continue to increase robustly. From January to June of 2015, volumes went up to roughly US$176 billion which is nine percent higher compared to the first half of 2014. It is 19 percent higher once denominated in domestic currencies. Bigger single-asset as well as portfolio negotiations has become regular features in dominant markets.

The United States is a prominent investment market with current volumes stepping up 29% last year.

The United Kingdom and Germany are two countries in the Euro Zone which recorded a solid first half during the present year.

China, which has been going through an economic slowdown, also recovered strongly in the 2nd quarter. In Japan and Australia, demand of investors remains high but the property markets are hampered by lack of products.

Investor requirements for major assets reached new heights both in London and New York accounting for a best ever 15 percent of international activity. The size, liquidity, lucidity and ‘safe haven’ characteristics of these super cities are enticing considerable capital resources from high net-worth individuals, sovereign wealth funds and universal institutions.

Impressive Leasing Volumes

Office leasing sectors bounced back during the second quarter. The volumes moved up eight percent year-on-year to the highest level for over three years. Leasing activity in the Asia-Pacific region grew by 41 percent year-on-year while Europe posted its strongest 2nd quarter dating back to 2008.

Meanwhile, technology drives demand all over the world particularly in the United States, Europe and Asia. A rental growth of four percent has been forecasted for the rest of this year in principal markets.

At present, London has the fastest rental increase at 12 percent annually. Also expected to be high performers within the last three years of 2015 are Tokyo and Hong Kong. On the other hand, several markets in the US are expected to experience a significant increase in rentals until December.

Optimism of Consumers

There are positive developments all over the world such as lower prices of fuel and energy; declining unemployment; and reduced interest rates. These are lifting disposable incomes in many countries. The performances of retail industries are improving in the Euro Region as cities in Northern Europe have displayed noticeable growth in retail lease. On the other hand, improvement in US marketplaces is gradual but the trend still remains upbeat.

In Asia, new foreign retailers together with progress of inbound tourism support numerous markets in the region. It is evident that constant innovation in completion and delivery of orders has driven adoption of logistics networks further. In turn, this intensified demand in multi-modal locations for computerized facilities and facilities that support well-organized urban logistics. Demand is enhanced by a growing manufacturing industry.

Vigorous Appetite for Residential Properties

The demand for institutional-grade residential assets is going up fast in many markets globally. Volumes have reached record levels while investor appetite for rental products in the young UK market have gone up. On the other side of the globe, policy constraints are still enforced in different residential markets within Asia but sales activities are increasing little by little increasing as the Chinese government has softened its policies on down-payments for buyers of second homes.

Conclusion

All in all, the market has shown marked improvement and consistency so investors and buyers of real estate are up and around worldwide.     

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