Connect with us

Investment

Everything You Need to Know About the Global Real Estate Market

property market update

Investment in real estate as part of a well-rounded portfolio is a smart plan. However, don’t limit yourself to your home country. Limit your risk and maximize your reward by diversifying your holdings.

Global real estate markets recovered from the 2008 economic downturn only to experience a post-pandemic downturn. Larger markets are tipping towards stability, while some are still losing value, albeit predicted to flatten out before entering a recovery phase. Read on to learn more.

Capital Markets Connection

In the U.S., capital markets have struggled in 2023. Factors, including wars in Ukraine and Gaza, have caused some market volatility and made stabilizing inflation challenging. However, 2024 has a more optimistic outlook. A 5.2% boost to GDP growth in the third quarter may result in a near-term recession not happening.

For example, European markets, such as Spain and the Netherlands, are seeing record growth. Several years of economic austerity are driving optimism in those markets.

The Middle Eastern market of Egypt shows promise as money enters the market. Countries like Qatar have struggled, and their capital market has been down 11% over the past twelve months.

Years of real estate speculation continue to drag on the Chinese market. Hong Kong is expecting a 10% decline in 2024.

European Housing Mixed

Due to strong demand, housing prices in Ireland, Iceland, and the Netherlands continue to rise. Macedonia, Romania, Portugal, and Germany also show positive growth.

In Romania, for example, the economy is strong, and the property market is stable, with solid demand for housing loans. If you’re a foreigner looking to buy an investment property or a home for your use you may get a good deal in Bucharest, where demand for houses and units (apartments) has dropped recently, and residential construction has slowed. This will soon create a supply crisis, with prices rising as the supply of available real estate does not meet demand.

Markets weakening include the U.K., Switzerland, and Norway. Ukraine is a unique case due to the war with Russia. Its housing market remains depressed, with continuing housing price declines.

U.K. housing prices remain flat despite falling prices in the highest-priced London homes.

Norway’s housing market cooled sharply due to stricter mortgage rules in 2017. The same applies to the Swiss government’s efforts to limit price increases.

Middle Eastern Housing Market

Weak performance in the Middle East indicates that the ongoing political and diplomatic crisis is not over. Qatar’s sharp economic downturn results from low oil prices and a weak housing market.

Advertisement

However, the UAE has seen a housing market growth of 3%.

Israel enjoyed a decade-long price boom and is now seeing government stabilization efforts reduce prices. Exceptions to this downward trend are the tiny island of Cyprus and the nation of Egypt.

Prices and housing starts in Cyprus are rising both in the EU member-state and the Turkish-occupied portion.

The Republic of Cyprus offers specific incentives to real estate investors in addition to modest returns.

The economy is expected to grow by 2.9% in 2024.

Asia Real Estate Grows Overall

The most developed markets in Asia, except China and Hong Kong, are seeing housing growth.

Thailand and the Philippines are experiencing growth. Japan, Singapore, South Korea, and Taiwan show upward momentum, although not at the pace of the frontrunners.

The Chinese government’s clampdown on speculation has strongly affected investment. Chinese investors now choose real estate outside the country for significant investments.

New Zealand and Indonesia also showed reduced housing investment as government mortgage lending legislation took effect. New Zealand is in an engineered recession to curb inflation. House prices have been -20 % over the past twelve months. The only for the housing market to go is up, and with high immigration, this is predicted to happen as soon as 2024.

The Americas on the Move

The U.S. remains strong with property development in coastal areas leading. After five years of solid house price growth, the U.S. housing market continues to grow slower than the previous year.

House prices in Canada decelerated sharply. They continue upward, but not at the double-digit increases of the past years. Quarter over quarter, sales volume also fell.

Mexico saw a strengthened market with modest price increases and substantial volume.

Advertisement

The average price in Chile is increasing. Brazil is poised for a recovery from last year’s downturn. Housing starts are up, although sales prices continue to be depressed.

Global Real Estate Investment

Direct investment into real estate can be risky. Managing a single property and collecting rent in a foreign country can be more “hands-on” than you desire. Another way to diversify your portfolio is to use a Real Estate Investment Trust (REIT).

REITs tend to yield better returns than other types of income-producing investments. These companies own shares of real estate mortgages, properties, and developments. You buy and sell shares of REITs like you would do with shares of stock.

REITs invest in housing developments, retail and office space, hospitals, schools, and entertainment venues. Their yields were double the dividend yields of the S&P 500. They tend to increase and decrease value out of correlation with traditional assets like stocks and bonds.

This makes them valuable for investors with limited funds and wanting to add diversity to their portfolios. REITs offer great possibilities without the risk of direct ownership and management.

Diversify Your Portfolio with Global Real Estate

A portfolio allocation to real estate for income and growth is a wise choice. Allocating your funds globally allows you to take advantage of differing economic conditions. Some parts of the world, like Egypt and Macau, are seeing double-digit year-over-year growth.

Other parts of the world are resisting the boom and bust cycle. Modest growth and income yields are the rule for much of Europe. Legislation and regulation are taming runaway housing speculation in China and Canada.

Although direct investment in global real estate has certain advantages, most people look at REITs instead. They provide additional diversification and potentially higher expected returns.

Would you like to learn more about real estate investment strategies? Join the discussion now!