Real estate investing, even on a very small scale, remains a tried and true means of building an individual's cash flow and wealth.
- Robert Kiyosaki
Real estate can be defined as a property that consists of a land and the buildings and natural resources on that piece of land. Thus, real estate in totality can be seen as an immovable asset comprising land and everything on it.
The real estate sector can be divided into four major categories: commercial, hospitality, retail and housing. The growth of this sector can be attributed to the rise in per capita income and the increase in the demand for corporate and urban accommodation.
The global economy has been severely affected by recession lately; the devaluation of credit funds, depreciation in property rates and lack of transparency in construction and real estate transactions are some of the factors that have directly impacted the commercial and residential real estate markets across the world, although there are signs of progress in the coming years.
According to Jones Lang LaSalle, a real estate services firm, “The heightened levels of volatility and risk aversion experienced in the first 4-5 weeks of 2016 combined with what is usually the quietest quarter of the year to make the results for Q1 2016 look quite weak, with volumes down 14% year-on-year. Nonetheless, recovery has been particularly rapid; equity markets are back to November 2015 levels and credit spreads have narrowed again. A sizeable amount of capital remains unspent across all investor types and we expect this to be deployed as we move through the year. With political uncertainty set to continue, from Chinese regulators to UK referendums and U.S. elections, JLL anticipates full-year 2016 activity to be broadly in line with 2015, with a central scenario indicating that volumes could be about 5% lower.”
Infrastructure development is going to play an important role in the development of the real estate sector globally. In countries like China and India, where economy is still growing and infrastructure development is on the rise, there is a huge potential for the real estate market to grow. Consumers in real estate prefer destinations and projects that offer good infrastructure facilities besides the main property. The coming years can be considered bright for real estate investment, as infrastructure is also expected to see growth.
Despite all calculations and statistics on the future of the real estate market, it is clear that human behaviour is going to play a key role in the scenario. The World Economic Forum states, “We expect that some real estate markets will face supply/demand imbalances through 2016 and 2017. And the yield compression cycle that has characterized commercial real estate markets in recent years must end at some point. We also know that real estate is a cyclical industry, but booms do not always end in busts. As always we need to scan the horizon beyond real estate markets for approaching external shocks. Amber lights are glowing at the macro-economic level.”
World of Business, as a business magazine, covers the global real estate scenario and provides in-depth analyses on residential and commercial real estate markets. The magazine also features articles and reports with inputs from renowned real estate consultancies and top-notch leaders in this domain to lend more credibility to its content.