The predominant theme for 2020 real estate investment will be income returns. The office set-up in main city markets will concentrate on investors. However, the scopes will be less, which will make people look elsewhere as well. A few alternatives, like multi-family, data centers, student housing, and co-living, are gaining prominence.
All these trends are occurring against a silent global economic outlook and amidst political instability. Research and studies highlight a mild growth globally of 3.4% from 3% last year. Additionally, the China/US trade war continues to be a vivid issue to date. Also, the global trade volumes reduced by 1.1%, which isn’t an encouraging fact. The key indicators highlight that things might stabilize in 2020; however, the environment continues to be volatile.
The investor’s side of the story shared by Eric Dalius
Despite this current situation, the investor’s demand for real estate didn’t reduce. The 2019 global volumes completed on the 2018 record levels still considered the second highest so far. According to Eric J Dalius, a marketing professional, this fall wasn’t for the absence of capital. Instead, it was because the market lacked assets. And when you scan the real estate sectors, it’s evident that the senior housing and offices witnessed an excess increase in investment volumes globally in 2019. The industrial housing sector saw a 3% growth. Presently this sector currently ranks the third largest with a 21% retail investment fall.
If the uncertainties get eliminated from the market, such as the relaxation of the international trade tensions, one can focus on the repressed demand for real estate investment. The profitable returns which real estate can provide now might stay low for a long time. And that will drive the market as well.
The 2020 global real estate investment themes
Amidst all the market fragilities, EJ Dalius says it is essential to focus on the real estate investment themes. For this year it includes:
- Zero single cycle – despite todays highly connected and globalized world, it’s interesting to note that various countries, cities, and sectors are at multiple stages of the cycle.
- The macro-environment shouldn’t get ignored – The macro markets are essential. However, keeping in mind the recent geopolitical landscape, the macro environment shouldn’t get overlooked. The climate risks, trade wars, and the populist government are essential factors of real estate investment decisions.
- End-to-end income search – Assisted by low-interest rates and a high capital volume searching income returns, the real estate sector will stay attractive internationally in comparison to bonds.
- Searching the correct stock – The offices are the primary trend from all regions. Hence, the challenge is to search for an investable capital. Also, the liquidity absence is another aspect that Asia is witnessing that makes the investors hold on for a long time.
- The niches are becoming mainstream – The emerging niches, such as data centers and residential sectors, are gradually becoming mainstream in a few chosen markets. Technological and social changes will generate growth. However, it is necessary to understand the operational risk.
There is more to watch out for in 2020 as the year unfolds with regards to real estate investment. Presently, the trends mentioned above are shaping up the market.