According to Savills World Research published last July 2018, the value of the world’s real estate reached US$280.6 trillion, the highest figure ever recorded with an annual increase of 6.2%. Residential real estate accounted for the largest share at 79% (USD220.6 trillion/PHP11.2 quadrillion) of that huge figure, with commercial real estate (USD33.3 trillion/PHP1.7 quadrillion) and agricultural and forestry real estate (USD27.1 trillion/PHP1.4 quadrillion) making up the rest.
Meanwhile, real estate asset to GDP ratio is at 3.5, which means global real estate value is growing faster than global income. By any measure, real estate is by far the most significant store of wealth, representing more than 3.5 times the total global GDP. Asia-Pacific was considered the largest region in the global real estate market, accounting for 40% of the market in 2018. This just goes to show how investing in South East Asia continues to be attractive.
In the upcoming new year, there are new opportunities that will open and prosper in its fruition. Real Estate in 2020 remains to be a relevant investment thanks to the different growth drivers that generates property demand. It’s also worth taking note that there are efforts initiated by the government, developers and investors to contribute in the production of supply.
WHAT TO EXPECT IN GLOBAL REAL ESTATE
| TOP CITIES FOR REAL ESTATE INVESTMENT IN 2020 | |||
|---|---|---|---|
| North America | Europe | Asia | Australia |
| Toronto | London | Ho Chi Minh | Melbourne |
| Vancouver | Madrid | Phnom Penh | Sydney |
| New York | Barcelona | Bangkok | Perth |
| Fort Worth-Dallas | Lisbon | Kuala Lumpur |
|
| Orlando | Berlin | Manila |
|
| Los Angeles | Greece | Cebu |
|
| Seattle |
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Tokyo |
|
|
|
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Osaka |
|
Meanwhile, the primary global real estate market has managed to remain stable, with investments remaining steady amid economic slowdown, trade disputes, and political instability. Thanks to economic uncertainty, which was further compounded by strengthened monetary policy, spiking interest rates was arrested. Developments such as these and more will have an impact on both buyers and sellers who remain cautious but still harbor certain levels of risk.
Property Type - capital investments are by property type, with income properties, development sites and offices leading the rest. This is why renting houses are still leading home purchases.
Market Generation - millennials have dominated the real estate market, followed by Gen X-ers and Baby Boomers in buyer demographics. The younger market tends to search everything online before making any purchases, and prefer spaces that are sustainable and spacious. They are far more economical, so second-tier cities with lower cost of living is better.
Technology - in the current market, both buyers and sellers continue to adapt to digital innovations for them to market and search for properties. These include selling platforms, apps, social media and smart home technology. They, in turn, become the reason why technology startups and firms are increasing.
SOUTHEAST ASIA IN CONTRAST
Compared to the rest of the world, there are 4 cities in Southeast Asia that are highly competitive when it comes to buying properties, and for good reason.
Bangkok - one of the most visited destinations in the world, beating cities like London and Paris when it comes to numbers of tourists every year. With that said, there are a lot of foreigners staying short-term and renting out condos during their stay in Thailand.
Kuala Lumpur - considered second best next to Bangkok, but in pricing real estate, KL is one of the most competitive cities to invest in. In fact, foreigners can buy and own land under their name, and even acquire a long-term visa should they decide to stay in Malaysia for good.
Phnom Penh - the rate of urbanization in Cambodia’s capital makes it one of the fastest growing cities in the region, in terms of population size. Demand for real estate remains strong in both housing and office space, because of the strong financial infrastructure and retail industry in the city.
Manila - the metropolis of the Philippines is expected to grow so immensely that it beats Tokyo and Beijing in population. This leads to strong demand and rising prices for properties. The only downside would be the restrictions for foreigners to purchase and own land; but they can own condominium units in the country under certain conditions.
4 VIEWPOINTS IN SOUTHEAST ASIA
When it comes to real estate investment, there’s a lot of opportunities in the Southeast Asian region. Here are X things to keep on the lookout for:
Growth of E-commerce
The traction of online shopping persists to be at large, especially in Asia. Indonesia and the Philippines are the leading countries in the Southeast Asian region. They not only boost demand for industrial real estate for their operations, but also for warehouses and logistics.
The rise of REIT
After the passing of laws to promote the establishment of REIT companies in the Philippines, all of the major markets in Southeast Asia have their own REIT industries. Even in Thailand, they tap the property markets from other countries like Laos, Cambodia and Myanmar.
Short-term Rentals & Mid-range Hotels
Tourism is a booming industry in Southeast Asia and is constantly being promoted to benefit the region and their respective economies. Instead of renting traditionally, a lot of homeowners have their properties rented out for transient stays and this is highly economical for younger tourists. Furthermore, foreigners usually book at 3-4 star hotels due to their pricing range, without sacrificing comfort and amenities.
Luxury Homes
Surprisingly, the hottest luxury home market is in Asia. In the Philippines, to be particular. Compared to major cities around the world like New York and London, the inventory is priced at more than half a million pesos per square meter. But demand remains strong despite the sky-high amount, thanks to foreign investors and wealthy locals.
Real estate is an ever-changing industry, and keeping up with the latest information for the ideal investment can be a challenge for some. With Sqft Global Properties Philippines Inc., you have one less thing to worry about. Send us all of your inquiries and we can tell you more about Global Real Estate in 2020 and the foreseeable future.