Global Real Estate Investment. What to Expect in 2021?

Overview:

  • Experts predict that despite the Covid-19 pandemic, the global real estate investment market will remain at a decent level in 2021.
  • Industrial and residential real estate types have shown enviable resilience to the global pandemic crisis. They experienced a subdued drop in transaction volume.
  • According to reputable experts, the main countries for investment in real estate in 2021 will be Germany, the USA, Canada, Australia, and Great Britain.

In 2020, the world has experienced unbelievable events and major changes. The pandemic and subsequent lockdowns around the globe have caused uncertainty not only for the average person but also business people who are involved in real estate investments have felt strong fluctuations in this area.

As for 2021, the use of the Covid-19 vaccine and the anticipated overcoming of the global pandemic gives good reason to think that the world economy will enter a phase of a strong recovery during this period. This fact in turn directly affects the real estate investment market and should boost property investor confidence in “tomorrow”.

A large number of developed countries are trying their best to keep their economies at as an acceptable level as possible. To do this, they are taking drastic measures to support economic development through ultra-low interest rates and quantitative easing programs. These low-interest rates will be able to support real estate investment in 2021.

Lockdown restrictions and widespread economic uncertainty have caused deal volumes to decrease in 2020. Experts estimate that global investment volumes have fallen by about 28% in 2020. However, it should be noted that the 2020 crisis did not affect all types of real estate in the same way. The industrial and residential divisions experienced more reserved drops in transaction volumes, increasing the market share, which accounted for 21% and 28% of total investment, respectively. The resilience of these sectors to changes in the past year of pressure gives strong hope that this inclination is likely to persist in 2021.

2020 was a challenging year in every way, and it didn’t spare the real estate investment sector. This is a truth that is hard to argue with, but despite the short-term uncertainty associated with the pandemic, real estate has been and remains an attractive capital-raising tool for investors in the long term.

What Real Estate Sectors Should Investors Pay Attention to in 2021?

  • Experts predict that office real estate will remain one of the largest property sectors for investment. The focus is expected to be on lower-risk assets with stable yield characteristics in the world’s best locations.
  • The residential sector will be able to attract an ever-increasing share of global investment, subject to the support of strong fundamentals and the growth and consolidation of portfolios of cross-border investors.
  • Elderly housing and healthcare are operating asset classes with long-term income potential. The accent on health and wellness in 2021 is expected to drive the investment share.

Where to Invest?

For those who are planning to make real estate investments in 2021, we have prepared a shortlist of countries that would be comprehensive for this purpose. You’ll be happy to know that there are many potential countries where you can invest your capital in residential property.

Germany

Growth in real estate prices in Germany will continue despite the pandemic and temporary economic difficulties, experts predict. The housing market in Germany is surprisingly resistant to the negative effects of the Covid pandemic. Only a slight slowdown in price growth is expected: apartments and houses will rise in price by about 4% in 2021 instead of the 5-6% forecasted earlier.

Reputable real estate investment specialists claim that the factors that influenced price increases earlier will persist in 2021: demographics that support the high demand for housing, a shortage of land for construction, as well as low-interest rates and a lack of alternative investment opportunities amid the instability of other markets.

The United States of America

The economy is showing good signs of recovery from the 2020 crisis: an overall unemployment rate is low and businesses are generally booming. These factors can’t but encourage new investment in real estate. Attention should be paid to cities such as San Diego, Los Angeles, and San Francisco, which are additional major destinations for real estate investment.

Australia

The Australian residential real estate market has seen extraordinary changes in property value over the past few decades. It has skyrocketed in significant and expensive cities like Sydney, Melbourne, Adelaide, Perth, Brisbane, and Hobart. Despite the recent tightening of credit policies, the country is recording a surge in investor interest.

Canada

Canada’s real estate market has shown great momentum and can even be said to have prospered recently. Home values rose about 10% last year in major cities, twice the long-term average. Metropolitan areas such as Toronto and Vancouver have consistently high real estate prices. Low-interest rates, moderate currency value, and tax abatements are factors that urged foreign venturers to increase their investments in real estate in 2020.

The United Kingdom

Great Britain’s real estate market has always been stable and has attracted the attention of global investors. At the moment, it is still a great place to invest in a stable asset for long-term benefits. The interest rate on the prime rate of the Bank of England has dropped to 0.1%. This in turn has increased investment opportunities. To give a necessary boost to the real estate market, the UK government has modulated the size of the temporary Stamp Duty Land Tax (SDLT) on real estate sales in order to attract new buyers.

Bottom Line

Investing in residential real estate is one of the most reliable ways to increase capital with a low risk of losing the assets invested.

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