Real estate was one of the industry’s best performers in 2016 and is forecast to remain strong through 2021. According to the latest survey by CBRE, an international real estate company, professionals are most optimistic about office towers, retail properties, and industrial space. Thus, let us have a look ar the trends of real estate.
CBRE says that land prices will continue to rise in high-end markets like New York City, San Francisco, and Washington D.C., as well as among institutional investors in more secondary markets like Dallas or Phoenix. It forecasts that global investment volumes will be $192 billion this year alone—more than double its level from 5 years ago—and almost triple the 2013 volume of $81 billion.
And that investment appetite is only going to increase, the survey finds. Among the top 10 cities with the highest demand, seven of them are in North America, according to CBRE. Only one is in Europe (London), and two (Tokyo and Singapore) are in Asia.
“The United States holds its own globally as an attractive investment destination,” said Vicente M. Benabicha, a senior vice president at CBRE and global head of research for Americas Investment Advisory Services. “We expect the U.S. will continue to maintain its appeal to foreign investors, particularly in gateway markets and other major cities across the country.”
Benabicha says that despite a slow housing market, investors remain positive about the prospects for U.S. real estate. That’s partial because it is seen as a safe haven for capital, but also because of growing demand from both domestic and international sources. “With improving economic conditions in China, Europe, and Japan, more capital is likely to flow into U.S. real estate over the next few years,” he said.
The nation’s post-recession recovery has led to a slew of investment in infrastructures such as subways, highways, and airports. Although that investment has slowed down in recent years, it is expected to pick up again as 2020 approaches, according to the report.
Meanwhile, despite slower consumer spending, CBRE says that retail real estate investment volumes are expected to remain strong — especially in prime markets like New York City and metro Los Angeles. Retail sales volumes reached $1.5 trillion in 2015, a 1% increase from 2014 after two years of declines. And despite a slow economy and volatile stock market, the world’s wealthiest people spent more than $1 trillion on luxury goods and services.
According to Robert S. Simpson, a managing director and global head of research for CBRE, the luxury retail market is expected to continue to grow over the next several years, leading to investor interest in high-end shopping malls, especially in New York City and Los Angeles.
“We expect exceptional retail leasing fundamentals for the next few years,” Simpson said. “While overall retail sales are forecasted to grow at a low single-digit rate over the next decade driven by overall economic growth, increase in consumer confidence, consumer spending and employment rates reaching pre-recession levels.”
The report also forecasts that the U.S. industrial market will remain strong, with markets like Dallas, Houston, and Memphis enjoying healthy investment flows. In fact, CBRE predicts that the industrial sector will benefit from an increase in manufacturing and production over the next few years.
Wal-Mart Stores Inc., for example, plans to invest a total of $35 billion in U.S.-based projects by 2020, including a new distribution center in Texas and new stores in Mississippi and Florida. The company is expected to create 10,000 jobs during this time.
In addition, industrial space in Atlanta, Boston, and Los Angeles is expected to remain strong as demand continues to increase.
Investors are also bullish on U.S.-based residential real estate, according to the report. According to CBRE, prime U.S.-based residential markets have been strengthening over the last few years. New York City is one of the most popular markets for investors because of its long history and reputation as a global center of investment, finance, and culture.
CBRE forecasts strong investment volumes for major U.S. cities like San Francisco and Washington D.C., as well as top metro areas like Boston and New York City. The report also points out that although most of the country’s top-10 cities for investment are in the U.S., there are a handful of top markets on both the East and West Coasts, including Dallas, Los Angeles, Atlanta, and Miami.
But even investors outside of the U.S. are interested in investing in U.S.-based real estate opportunities. Chinese investors are expected to invest $12 billion in U.S.-based real estate this year — more than any other foreign investor group — and could surpass Japanese investors to become the largest foreign group by 2020, according to an article published by Bloomberg News earlier this year.
These are the trends of real estate that have been fluctuating in real estate industry in the year 2021.
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