The real estate market scenario all across the world in 2019 will witness several interwoven aspects with strengthened fundamentals, enlarged level of transaction volume and bigger contribution of investors.
The economic landscape in most of the developed and now even developing nations is growing moderately with an increased number of employment rate and the addition of more jobs. As per statistics, the rate of unemployment fell below 5% in early 2016 globally. With this, the demand for housing, office space and other forms of real estate is also rising.
Let’s look at certain trends that have a great impact on the overall real estate industry in 2019 and probably beyond than that.
- Retrenchment of Debt Capital Market
Debt markets and mortgage-backed securities are apparently decelerating down for the commercial real estate market. Supervisors are telling bank lenders for limiting lending of commercial properties, and insurance corporations have started approaching their restrictions of property allocation.
Hence, ahead in 2019, there will be,
- More restriction in the lending environment will be seen
- There will be a more intense search for permanent debt capital
- The capital competition will be a major issue in 2019-2020
Although these insights are based on the shift and changes in the industry, the actual scenario might be little different than it is expected and thus market research is an important thing to do before investing.
- The Rise of Urbanization
The factors that attract more people, irrespective of age, for urbanization are walkability, convenient transportation and extensive options for living, playing, and working. Most of the people nowadays are shifting towards the high-density areas because of growth in the job sector. These go-ahead centres in different nations are enticing more businesses and residents. There is an emergence of education and innovation centres as well, putting pressure on suburbs for becoming urban in 2019.
- Low Rate Of Interest: The Scenario of Cap Rate
As per the air in the commercial industry that the US Federal Reserve is likely to go for another interest rate hike by the end of this year, that won’t be a major one, however. In 2016 – 2017, the boost was somewhere around 0.25% to 0.50% and this time it is expected to raise even more.
As initial apprehensions of the Brexit effect tend to smooth out, Ten-year Treasury Yields rose back to above 1.5% in the last couple of weeks. And by the commencement of 2019, Yields is also expected to proceed towards a normalized range of 1.75% to 2% or even more.
Again, as for the cap rate binges, there is a little clue of the rate upsurge to push them up intensely. Therefore, ahead in 2019, stockholders would probably surge more aggressively in the direction of secondary and tertiary markets globally.
- The Changing Scenario of Global Economy
As per the reports of IMF, because of economic uncertainties, the GDP growth rate would move downward in 2019-2020. The market would continue being unpredictable with declining exports, soft energy prices and currency issues being the major influences. While political issues wear off stability, real estate in some of the major nations will still attract international investors.
In fact, as per Asia Society and Rosen Consulting Group’s report, there has been a growth in Chinese buyers of the US residential as well as commercial assets in 2017-18. The total of 5-year investment moved to more than $110 billion.
Ahead in 2019, despite the volatility, the global real estate market continues to remain the most striking markets. It is also expected that a strong global economy will bring more real estate inflows in the international market. However, there are chances of this volatility affecting the commercial real estate pricing all over the world.
Author’s Bio – Tom Clark is a real estate expert who is popular for his predictions in the industry that proves to be effective in most of the occasions. Along with the rise of real estate industry, he also feels that there will be a significant rise in the uses of storage units Portland as well as in other locations since most of the people look forward to reallocation and they also feel that there is a shortage of space.