Real estate has developed into an established asset class with an individual return structure consisting of ongoing returns and a capital growth component. Nevertheless the regional composition of investment universe available to institutional investors is changing only slowly. Eurohypoâs latest market report looks at these trends from a very global perspective.
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Regional distribution of the global
real estate stock.
According to the Eurohypo RAC Research study, there will be no clear shift in global real estate market trends for another 15 years. The highlights are:
- The real estate stock presently available for investment purposes of institutional investors is dominated by the USA, Japan and the UK, followed by Germany and France. These 5 countries have a share of around two thirds of the entire global stock.
- Projections of the global population development up to 2050 suggest a reduction in many western industrial nations and significant growth in the developing economies.
- The emerging markets in Asia, Eastern Europe and Latin America are currently the largest building sites on the global real estate markets. The parallel process of economic upturn will lead to a clear rise in significance of these real estate markets. For example, the growth rates of the real estate stock in the BRICs countries after 2020 will be at least double that of the established western real estate markets.
- In Asia, the Chinese real estate market will be competing with Japan for the top position in terms of size by 2050.
- In Europe (incl. Central and Eastern Europe) the Russian real estate market will have reached proportions comparable with Germany and France by 2050 and the Turkish market will be competing for the top positions in terms of size with Spain and Italy.
- Global strategies are focussing increasingly on the structuring of portfolios. Expansion of activity in developing countries and regions can therefore be expected. In the established western real estate markets, on the other hand, optimisation in the sense of active port folio manage ment regarding development, purchasing and selling of properties will assume an increasingly important role.
Source: Madano
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