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Global investable real estate to grow by more than 55 per cent by 2020
Source: The Times of India Feb 27, 2014
Global investable real estate to grow by more than 55 per cent by 2020

The Times Of india

Rapid urbanisation and demographic changes, especially within emerging markets, will lead to substantial growth in the real estate investment industry over the next six years, according to Real Estate 2020: Building the future, a new report from PwC. At the same time as the industry's opportunities grow, so too will assets invested into the sector.

The report predicts that the global stock of investable real estate will rise by more than 55 per cent to around $45.3 trillion by 2020, from a 2012 total of $29.0 trillion and will expand again by a similar proportion by 2030. The expansion will be greatest in emerging economies, where economic development will lead to better tenant quality and, in some countries, clearer property rights and will play out across housing, commercial real estate and infrastructure.

The report also finds that private capital will play a critical role in funding the growing and changing need for real estate and its supporting infrastructure.

Intense competition for prime real estate will force real estate managers and investors to seek out new opportunities for yield. Yet the growing and changing real estate world will present them with a far wider range of risks, which they must be equipped to manage.

Regional growth in investable real estate in Developing Asia-Pacific

PwC predicts that total investable real estate in developing Asia-Pacific countries, which includes India, will rise by 140 per cent to $10.2 trillion by 2020, from a 2012 total of $4.3 trillion. The increase in percentage terms is the highest when compared to other regions such as USA, Europe, Latin America, Developed parts of Asia Pacific and even Sub Saharan Africa and Middle East & North Africa. Shashank Jain, executive director & leader - Real Estate Transaction Services at PwC India said, "Real estate is an integral part of the emerging markets' growth phenomenon. In India, for example, real estate has played a large part in driving economic growth.

Globally, the real estate industry is at the centre of rapid economic and social change, which is transforming the built environment. Already thousands of people migrate from country to city across Asia, the Middle East, Latin America and Africa, attracted by the wealth of these new economies. By 2020, this migration will be firmly established. Cities in these regions will swell and some entirely new ones will spring up. In China, India and Middle East, entire new cities will be built using eco-efficient technologies to reduce their environmental impact," he added.

Governments and the investment community may need to work together to fund and build these cities and their infrastructures. But, at the same time, its unlikely that all of the new cities planned will attract the resident forecast, as the high vacancy rates in some of Asia's newest cities already show.

Meanwhile, the growing middle class and ageing populations in these emerging economies are increasing demand for newer types of real estate. While office, industrial, retail and residential will remain the main sectors, affordable housing, agriculture, healthcare and retirement accommodation, will become significant subsectors in their own rights.

As real estate is a business with long development cycles, now is the time to plan for these changes.
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