Property values across the globe have risen to the extent that they now eclipse all other stores of wealth for investors. Real estate assets have long held sway as a safe investment segment, particularly in times of uncertainty. Robust values are being underpinned by the ongoing low interest rate environment, government stimulus packages, and restricted trade as well as construction over the course of the pandemic leading to constricted supply of real estate assets.
The collective value of world’s real estate assets increased by 5 per cent in 2020 to $326.5 trillion leading the sector to surpass all global equities and debt securities combined, as well as the sector being equivalent to quadruple the global GDP, according to Savills. Residential real estate assets accounted for 79 per cent of this value with 8 per cent growth over 2020. Meanwhile commercial property values fell 5 per cent to $32.6 trillion on paper.
A key segment of the property sector is multifamily real estate, now firmly placed as Europe’s second largest property sector for instance. Attracting 23 per cent of investment in the first half of 2021 (Savills), the multifamily segment attracted a significant uplift in share of investment capital relative to the 16 per cent five year average typically expected. Multifamily induced capital flows attributed to over a third of investment activity in countries like Germany, Spain, Sweden and Denmark.
Rising demand for rental homes, supply shortages in housing stock, as well as fervent investor appeal that is pricing out home buyers, has increased multifamily rents by 4.6 per cent per year on average since 2015 across 27 cities analysed by Savills Europe. Meanwhile, for commercial assets, owners have remained committed to the long term upside potential from both capital growth and steady income flows.
The value of the world’s real estate assets rose 5% in 2020 to $326.5 trillion, making it the world’s most significant store of wealth and more valuable than all global equities and debt securities combined, and worth almost four times that of global GDP