The FINANCIAL -- London - 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% 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, according to PwC.
“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," said Kees Hage, global real estate leader at PwC.
“Meanwhile, the growing middle class and ageing populations in these emerging economies are increasing demand for specific types of real estate such as affordable housing, retirement accommodation, gated communities outside cities for families and smaller urban apartments without kitchens or car parking for young professionals. As real estate is a business with long development cycles, now is the time to plan for these changes,” Hage added.