globalEDGE Blog - By Tag: real-estate

Whether someone is buying or renting a house, there is a significant advantage if a home buyer pays in U.S. dollars. The dollar has surged against the British pound and euro in recent years. This led Americans to flock to countries like France and the United Kingdom to buy homes at a discount. The euro has since regained some of its strength, but those buying with the U.S. dollar can still see big savings in countries like Canada.

Two years after the collapse of China’s real-estate bubble, worries that it may collapse again are starting to rise. China’s largest private property developer, Country Garden, is struggling to pay back their enormous loans. Dealing with strict government regulations has made it even more difficult for companies to deal with their growing debt.

With society on the edge of its seat in anticipation of a continued recession, the U.S. is going against expectations and is appearing to turn around the economy. The U.S. economy grew by 2.6% in the third quarter of this year after declining by 6% in the first quarter and 1.6% in the second quarter, which by definition takes the economy out of a recession. This is introducing reduced fears of a future recession; however, it does not prove that the economy has fully recovered.

The United States housing market has been on a steady increase over the past few years. There has been a major increase in the number of new homes being bought and sold across the nation. During the start of the pandemic, the interest rates on houses were lowered to help revive the economy and keep it afloat during hard times. This year, there is a steady rise in mortgage rates outside of slight dips here and there. This rise in mortgage rates combined with an already high-priced housing market is making the market even less affordable. However, there recently has been a change in the amount of time houses have been sitting on the market. For the first time in almost two years, the first annual increase in the amount of time a house spends on the market is being noticed. This extra time on the market is also reflecting the steady drop in the asking prices of houses seen by many owners.

While a major investment, real estate has always been considered a safe investment as it comes with benefits in the long run. Passive income, equity, monthly rents, and tax breaks are just some of the benefits of investing in real estate. The luxury real estate market is specific in the real estate industry as it consists of the industry’s high-end buyers. Luxury real estate is not called luxury just because it’s expensive. Still, the exclusivity and unique attributes of the property make these properties desirable to high-end buyers.

The housing market is an unforeseen casualty amidst the COVID-19 pandemic. According to the Bank for International Settlements (BIS), the hot housing markets are a global phenomenon. In the United States, Canada, Europe, New Zealand, and South Korea, the housing markets are seeing a surge in price growth, in some areas reaching price overvaluation of more than 20%. More specifically, global house prices are now 22.4% higher than their level immediately after the financial crisis and up 29.2% in advanced economies. The Bank of Korea even warned that real estate is “significantly overpriced” in June 2021, along with discussing the growing household debt repayment burden. In the rest of this blog, we will go over the reasons for the increased pricing, how countries and global institutions respond to them, and the actions different countries have taken to lower the costs.

Tulum, located in Quintana Roo, Mexico, is known for its modern bohemian-style atmosphere, its beautiful beaches and cenotes, and its eco-friendly nature. Just a decade ago, Tulum was relatively untouched and undeveloped, but it is now one of the fastest-growing destinations in the world for both vacations and residency. A big reason for this is the developers’ strict commitment to preserving Tulum’s natural beauty by building highly sustainable and environmentally friendly infrastructures. These efforts have attracted some of the world’s best architecture firms and novel real estate investors alike.

Real estate is a massive market that contains multiple subsections such as residential real estate and commercial real estate.  With the current pandemic, many sectors of our economy have been left reeling.  Airlines have lost thousands of dollars, restaurants have found themselves under capacity by law, hotels are empty, and many more industries have been shaken by COVID-19.  But what about the real estate industry?  Today, we’ll take a look at the current state of the real estate industry around the world, as well as a few key trends to watch out for.

Looking ahead into 2019, with uncertainty in the world’s equity markets, many investors are viewing real estate as one of the safer markets to invest in. With that being said, here are three countries with some of the most promising outlooks for 2019:

A roof over your head and a bed to sleep in—shelter is one of the most coveted and widely sought after needs in our world.  With billions of homes built around the world as a way to protect people from the outdoor elements and provide refuge to rest, it’s no wonder that the global real estate market is one of the most highly-valued and invested-in sectors in the world.  Holding a total estimated value of 217 trillion dollars in 2017, 75 percent of which comes from residential property, real estate is a massively important component of the worldwide economy.   In fact, the market is expected to generate 4.263 trillion dollars of revenue alone by 2025.

Real estate investment trusts (REITs) are a type of investment vehicle which invests in real estate through property and mortgages, and similar to stocks, they can be traded on major exchanges. In the U.S., there are three major kinds of real estate investment trusts (REITs). Equity based REITs own and invest in properties, and are responsible for the value of their assets, and account for the majority of REITs. Mortgage REITs invest in and own property mortgages, and tend to either loan money to real estate owners for mortgages, or purchase mortgage-backed securities. Hybrid REITs are the third kind of REITs, and invest in both properties and mortgages.

Foreign interests in the American real estate market have dropped recently. A report released this week by the National Association of Realtors indicated that foreigners are buying U.S. residential real estate at the lowest levels since 2013.

The Aussie real-estate market is an increasingly mercurial frontier for investors and home-owners alike. Housing markets are no stranger to high rates of default and bad debt, but Australia’s uniquely volatile real estate business has been steadily oscillating toward bubble status since 2001. The whole world was crippled when America’s housing bubble, launched to dangerous heights by massive collateralized debt obligations and junk bonds, eventually exploded in a manner that shook the global economy. Australian default rates are nothing short of shocking and have narrowly avoided causing American 2008-esque crashes in the past several years. The uncertainty from this part of Australia’s economy adds fuel to its fire, but other times it serves to strengthen its own currency and outperform other sectors of the global economy. But everything has a cost, and though Australia might not be facing the immediate risk of a bubble, a slow and painful demise is usually in store for those who mistake healthy credit margins for insurmountable housing debt.

It is no secret that China has experienced massive capital outflows over the past year, and it also isn’t a secret where a lot of this capital is going. Capital flows from China to the U.S. have occurred at record levels in 2015 and the first quarter of 2016, with a large portion of these flows going into real estate and other hard assets. What is particularly interesting, however, is the recent acceleration of Chinese investment in the hospitality industry of the U.S., mainly hotels. It isn’t an entirely new phenomena, as evidenced by the Chinese purchase of the historic Waldorf Astoria in 2014 for $1.95 Billion. It is striking, however, how quickly the pace of investments has increased. Much of the high profile purchasing comes from one company, Anbang Insurance, but represents a larger ideal within China.

Over the past five years, the U.S. real estate market has been flooded with capital from Chinese investors who are eager for the opportunity to both earn high yields and move their cash outside the reach of the Chinese government. This real estate binge began when the crash of the U.S real estate market drew in thousands of Chinese investors looking to swoop up houses and commercial properties for highly reduced prices. The Chinese government limits individual's annual overseas investments to roughly $50,000; however, for years these laws have been circumvented by channeling money through friends, relatives, and employees. After the Chinese market crash in August, the government has cracked down on these laws, making it increasingly difficult to transfer capital outside the country. John Chang, a real estate broker with Re/Max in New York City described the current situation as being “like barbarians at the gate,” Chinese families want to buy, but “can’t get the money out.” 

With a population of 5.4 million people crammed into 274.1 square miles, the country of Singapore could be considered a slightly smaller version of New York City. The country is a center for business offices, commercial buildings, retail stores, and residential apartments. However, a mounting need for space is becoming imminent as experts project Singapore’s population to grow to 6.9 million people in the next 15 years—a 1.5 million increase. Presently, the struggle for land has caused military camps and old residences to close down in order to make room for residential and industrial real estate development.

Worrying about the United States expansionary ambitions in the mid-1800s, Mexico prohibited foreign ownership of land within 50 kilometers (31 miles) of the coast or 100 kilometers of an international border. This policy was pretty efficient for protecting the homeland but it did block some foreign investments throughout history. As the financial crisis spread all over the world, Cancun realized it needs help from foreign investors and this help was going to break the law. Some real-estate developers believe the move could boost the nation's vacation-home market, while others think it would be hard on the locals acquiring their own estates.

As China becomes the world’s second-largest economy behind the United States, more investors are becoming interested in its stock market to seek profits. However, things are not that easy in the stock market, China’s stock market has just experienced a deep dive recently due to government intervention in the property market.

United Kingdom, the financial center in Europe, has always been an attractive investment place. Because large amount of foreign buyers rushed into London’s real-estate industry, it has produced highest profits in the United Kingdom since 2011. It seems like British home sellers are never satisfied by the status quo as they raised asking prices to their highest levels in five years this month.  However, the increasing price on the real-estate property did not stop foreigners from buying British homes. Instead, they invested more since they foresaw the huge potential of growing profits in the British real-estate industry.

In today’s blog post for the Global Real Estate Series, we will be looking at the commercial market for real estate, including key aspects of the industry as well as future outlooks. The market for commercial real estate is comprised of office, industrial, and retail properties that are intended to generate a profit, either from capital gain or from rental income. Global commercial real estate markets have seen much improved growth recently, up from the lows of a few years ago.

Across the world, there are a wide variety of resources needed to successfully operate a business. Many people may be quick to name equipment, technology, wealth, and labor as key resources. However, a resource that is often overlooked is land. Land along with buildings located on the property make up real estate. The global real estate market holds great importance for businesses and people around the world involved in the buying and selling of property. This week the globalEDGE blog team will explore several aspects of the global real estate market including private real estate and green construction. This post will take a look inside the international housing market and the market characteristics of several different countries.

Since 2002, The Economist has been measuring house-price data for 20 of the largest players in the world of global business. They recently compiled this information and incorporated it into an interactive graph which can compare various house price indicators between countries. It measures: house price index, prices in real terms, prices against average income, and the overall percent change. Check out the Global House Price Indicators Graph!