The next five years are likely to see further recovery in markets previously hit by economic downturn, particularly in Europe. Stable prices but lower transactional activity seems to be on the cards for core prime cities which have been fully invested in recent years.
Meanwhile, small cities that are succeeding in the tech economy as well as those where strong economic growth is expected nationally or locally are likely to see increased transaction levels.
Smaller US cities and key European cities are likely to be the mainstay of this trend while India seems most likely to benefit from growth in emerging markets. Barriers to real estate investment are still a feature in many jurisdictions however. Anti foreign investor regulation and legislation will reduce cross-border activity as will high levels of corruption and lack of transparency in some places.
Geo political factors will also dampen appetite in certain regions, notably the Middle East, although conflict and displacement may boost the appetite for outward, ‘safe-haven’ cross-border activity and for some of the more stable real estate and cities within the region.
It is striking just how similar some of our tips are, across the world – despite the fact that they have originated in different markets and among different researchers. This just serves to show that there are global forces at work which act as a heavy hand on the tiller of local markets.
Foremost among these global forces is simply the nature of money. The impact of looser monetary policy almost everywhere, low inflation, low interest rates and quantitative easing cannot be overstated.
Added to this, is the creation of wealth in an increasing number of emerging economies, as well as ageing populations with more invested equity in the developed world. All this means that there is more capital at large, seeking both capital appreciation and, increasingly, income.
The other theme that emerges from our researchers’ prognoses is the dawning of the digital age and the impact it is having on the built environment. The importance of logistics to service the needs of e-commerce has been identified in every region. Meanwhile, the more subtle effects of a changing workforce are beginning to be identified in key cities, especially North America.
The entrepreneurial Tech industries are all about proximity to talent and so successful locations are those that are capable of attracting this human capital, their city has become a commercial entity for them.
All this supports the three pillars of real estate investment for the next decade, which regular readers of our other publications will have seen rehearsed before.
1. The rise of secondary, and tertiary, markets
2. The rise of second-tier cities
3. The rise of alternative asset classes and locations