WORDS: DEBBIE HATHWAY :: PHOTOS: SUPPLIED
Insights, guidance and research by industry experts on navigating the complex and dynamic global investment and commercial property markets, empowering investors to make informed decisions and stay ahead of the competition.
Despite the growing turbulence in the global economy, the real estate sector remains remarkably resilient, providing astute investors with above-average returns. To achieve this, it is crucial to stay abreast of current trends and leverage them to make informed, sound long-term investment decisions.
The significance of this is amplified by the fact that, while the real estate market is inherently dynamic, the pandemic has triggered unparalleled shifts and emerging trends due to changes in lifestyle and heightened market uncertainty. Claude McKirby, Co-Principal of Lew Geffen Sotheby’s International Realty in Cape Town’s Southern Suburbs and False Bay says, “To properly leverage current trends, one must not only be aware of them but also understand their origin, their import and their impact on the market. Because, although some of the currently emerging trends will probably be no more than passing fads, others are here to stay and will continue to influence the market for years to come.”
LOOKING BEYOND THE PERMACRISIS
Liam Bailey, the Global Head of Research at Knight Frank and Editor-in-Chief of The Wealth Report, highlights the “historic shock” caused by the Ukraine crisis, which exacerbated the European energy crisis and intensified the already surging inflation. Consequently, 2022 witnessed one of the steepest increases in global interest rates ever recorded, resulting in economic conditions that Collins English Dictionary aptly dubbed the “permacrisis.” But now, despite the political and economic status quo, he says it’s time to look beyond that if investors are to take advantage of the very real opportunities emerging across global real estate markets.
The report highlights inflation as a significant factor influencing investment decisions in 2023. To navigate the current high-inflation environment, investors might shift towards commercial real estate owing to its robust growth potential. However, there are indications that inflation may have already reached its peak across most major economies, leading to the possibility that its impact on investment choices could moderate as the year unfolds.
Private investors were the most active buyers in global commercial real estate markets in 2022 with US$455 billion invested, accounting for 41% of the total, according to RCA. Multifamily residential – or private rented sector – offices and industrial assets attracted the greatest interest. Ownership in retail, life sciences, healthcare, PRS, data centres and education real estate all increased in 2022 compared with the previous year.
In 2022, private investors emerged as the most prolific purchasers in the global commercial real estate markets, investing a total of US$455 billion, which accounted for 41% of the overall amount, as reported by RCA. Multifamily residential, office spaces, and industrial properties garnered the most attention, with increased ownership observed across several sectors, including retail, life sciences, healthcare, private rented sector, data centres, and educational real estate, compared to the previous year.
IMPORTANT TRENDS TO BE AWARE OF
The trend towards globalization is fuelling a surge in real estate investment worldwide. As more investors explore opportunities in foreign countries, there is an increasing demand for global real estate investment trusts (REITs) and other investment vehicles that enable investors to participate in real estate assets across multiple nations.
In addition, the pandemic has hastened the integration of technology, with homebuyers and renters increasingly seeking smart home features such as automated lighting, temperature controls, and voice-activated home assistants. To remain competitive, investors should prioritize properties that can be easily upgraded with these in-demand features.
When contemplating real estate investment, investors should also explore various financing options to determine the most cost-effective approach. This might involve traditional mortgage financing, private lending, or even crowdfunding. Furthermore, investors should consider diversifying their real estate portfolio to distribute risk and optimize returns.
Emerging markets present significant opportunities for real estate investors, with fast-paced urbanization and a burgeoning middle class driving demand. Nonetheless, investing in such markets can also be a risky proposition, and as such, thorough due diligence and collaboration with seasoned local partners are crucial.
Technology is transforming the real estate sector in many ways, including streamlining the buying and selling processes and offering innovative methods for managing property assets. Investors who remain attuned to these trends and invest in suitable technology can enjoy a distinct competitive edge.
