We are currently going through a time of unseen geo-political and economic concerns. Because of this, research into trends in both the economic and property market. Emerging trends in Real Estate ®- The Global Outlook for 2017 is an annual forecast of the real estate investor sector around the world. The forecast is published by both PwC and Urban Land Institute.
A number of global business leaders interviewed for the forecast and it is thought that the challenges faced by the property market will lead to a ‘flight to quality’ by the majority of institutional investors. This focus on quality properties being invested in will lead to a low growth environment as well as a risk-off attitude. This environment in the property industry will make real estate a very attractive asset class, which could have the advantage of creating a relatively high portion of income return.
The Emerging trends in Real Estate report references the geo-political events that leads to the creation of a wide variety of risks in this sector. These geo-political events include the U.S election, Britain’s decision to leave the European Union, the uncertainty of the upcoming elections in France, Germany and the Netherlands all contribute to the array of potential risks. There are also a variety of different risks that pose a concern for industry leaders will be volatility in exchange rates, as well as land cost and availability, taxes and regulations. As well as this, some of the industry leaders also voiced concerns around shifts in the market and talent pool which could be brought about as there becomes an increasingly more global focus back on domestic agendas.
Essentially this all adds up to a great deal of challenges facing the real estate market; so now there needs to be a focus on solutions. However, there is a divide in opinion for where best to invest the capital that is allocated to the real estate market in order to get the best return. Asia-Pacific had a 31% share of cross border capital last year, which is the largest in the current cycle. The Emerging Trends report also suggests that there will be continued investment in to emerging markets, as well as continued investment in the U.S which is displayed as a market that offers very little risk. On the other hand, the investors are showing signs of caution when looking at the European market with Brexit on the horizon.