The real estate sector has very specific business development challenges. Our real estate experts and business development teams will bring you an insiders high level of understanding with deep expertise, as well as a range of direct real estate contacts and industry networks. In short, we will bring you the knowledge and tools in the real estate sector to support and deliver your international business and trade development goals.
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Even though current monetary policy is more buyer friendly, those looking to get on the property ladder remain reluctant to purchase houses due to unstable global economic prospects coupled with high unemployment rates, and rising food and fuel prices. An oversupply of housing and tight credit conditions pushed the prices and sales down in numerous markets globally1.
Since 2008, house prices have stabilised, however it does not mean that the bottom price has already been reached. In the USA, since 2008 house prices have fallen by 29.5%, which is almost as severe as the 31% fall of the Great Depression in late 1920s6.
Economically resilient markets are considered to be the UK, France, Nordic countries, with Germany regarded as a leader (due to its fast paced recovery and declining unemployment rate). The demand for German exports is also driven from emerging markets (especially from China). However, the interest in real estate has been higher in the UK, so an unexploited potential can still lie in Germany (Munich, Hamburg, Berlin and Frankfurt). The situation in France is said to be stable, but not booming. The leading city for investment attraction is Paris, but also other French regional cities outperform the UK's demand for property. These include Lyon, Marseille, Bordeaux and Toulouse with a fair demand for the occupational market3.
Challenges for Europe today include regulation, austerity measures, sovereign debt crisis, and weak lending market. The debt woes for Greece, Ireland, Spain and instability in other European countries together with the Basel III regulation* and other political efforts to fix the financial markets by regulation have made the recovery of the real estate environment even more challenging.
The current situation might be more long-term than initially thought, as industry experts are already developing strategies on how to operate within such an environment in the following years to come (Adapt or Die approach). This belief is supported by increased regulation and significant structural changes. As well as Greece, other powerful countries struggle to sustain their economic development without a need for a financial aid. It is no longer expected that the market will recover into a pre-crisis level, the real estate environment is being re-shaped and re-defined. The environment is said to be more challenging than ever, but experts seek for opportunities coming from this newly defined situation, and improved profitability prospects3.
The environment is anticipated to benefit big players - well established firms, rather than niche marketers and newcomers. Due to a risk averse capital, investments will flow to highly demanded cities such as London and Paris, rather than Dublin. The best prospects are seen for the sector of city offices, retail, and rental apartments. Creative thinking is essential to identify which type of property will be highly demanded in the future, such as residential land, sheltered housing, and nursing homes3.
In order to keep pace with developments in the real estate sector, it is important to have access to actual, accurate and complete information and in-depth expertise. We will help you to address all important issues, including trends, key success factors, advances and innovations, supply and demand development, operational and financial risks, benchmarking, as well as regulations and opportunities for funds and grants.
Some of the key opportunities and trends include:
Real estate equity→ Improvements in the real estate equity are anticipated this year, mainly from investors from Asia Pacific, institutions, and private equity funds3.
Increasing housing prices in France, Germany, Switzerland and Canada→ The recovery of the housing industry continues in certain better performing countries. In France, average real prices increased by 7% in 2011, while in Germany the real house price index rose by 1.85% during the year to August 2011, the highest increase since 20067. Switzerland reported steady real price increases averaging 4%, so did Canada with home prices up by 5%. Interestingly, the Canadian national average is influenced by strong sales of high-priced properties in the Greater Vancouver Area, often initiated by foreign buyers1.
Separation of generation houses→ According to the Economist, the demand for houses is going to rise in the near future. Many families were forced by the crisis to sell their houses and move in together with their other family members, creating numerous generation houses. In the years to come, as the economic conditions improve and savings of consumers increase, they will be able to afford to move out from these generation houses, searching for a new place to live, stimulating a new demand in the real estate market. There are now nearly 2 million fewer households than one would expect given the current population growth in population of the United States4. Some remain skeptical about this scenario, whilst others see hope and opportunity here.
New house builds→ As a consequence of the credit crunch, new house builds have dropped by three quarters since 2005. This trend is expected to continue, however industry experts claim that this downturn will lead to a housing shortage in the future. The population is growing rapidly, and housing will not suffice the needs of inhabitants during the following decade. Some of the key sector players are already buying land for building new houses as they expect a significant increase in demand soon5. In the US for example, according to the US Commerce department the increase in the number of new homes constructed in November 2011 has caused the annual rate of new home construction to rise by 3.9% in one month8.
Compact housing→ Babyboomers and younger generations are increasingly interested in smaller, easily manageable and more compact housing as opposed to large mansions that used to be popular with their parents. This creates a demand for smaller houses, and supply of large mansions at the same time5.
Long-term housing→ Especially in the United States, buyers no longer perceive houses as investments as they did in the pre-crisis housing boom. In the future, they will tend to switch houses less often, staying in the same house for more years, making them their real homes5.
Passive housing→ This recent trend helping to reduce the ecological footprint is based on energy efficiency, when passive buildings need very little or no energy to be heated and cooled. Green houses require higher investment at the beginning, but they are very economical in the long run, leading to significant savings. Numerous governments support this green movement by offering financial incentives not only for newly built houses, but also for improvements on already standing houses, including roof solar panels and windows that improve the overall isolation. House buyers of both new builds and older properties are increasingly aware of the environmental and energy efficiency ranking of houses and regard it as an important criterion while selecting their house.
Australian housing boom→ A housing boom in Australia has started in recent months. While the market benefits from a strong economic growth and low unemployment, record high house prices and interest rate increases by the Reserve Bank of Australia affect the nation's affordability1.