Real Estate Market

Market Overview

The global real estate market size was valued at USD 3,694.47 billion in 2022. It is estimated to reach USD 7,142.70 billion by 2031, growing at a CAGR of 7.6% during the forecast period (2023–2031). Factors like the increase in public-private partnerships and the rise of the residential construction industry stimulate market growth.

An increase in public-private partnerships (PPP) and the rise of the residential construction industry stimulate market growth. Real estate is an important asset class that includes land, tangible structures, and improvements, such as buildings, houses, and undeveloped land. It provides shelter, facilitates business operations, and generates investment opportunities. Residential real estate includes single-family homes, condominiums, apartments, and townhouses, whereas commercial real estate comprises office structures, retail spaces, industrial facilities, and warehouses. Vacant land can be used for residential or commercial development, or it can be held for investment or future development. Real estate is vital to the economy, contributing to employment, economic development, and wealth creation. Residential real estate accommodates individuals and families, while commercial real estate provides spaces for businesses to operate, fostering economic activity and job creation. Real estate investment allows individuals and organizations to generate income and amass wealth.

However, real estate ownership and investment involve several factors and hazards, such as market conditions, property location, financing, and property management. Individuals and businesses involved in real estate must conduct extensive research, seek professional advice, and evaluate opportunities thoroughly to make informed decisions. Real estate is a dynamic and diverse industry that plays a crucial role in the economy, housing market, and investment landscape.

Market Dynamics

Global Real Estate Market Drivers

Increase in Public–Private Partnerships (PPP)

A public–private partnership (PPP) is a type of joint venture that may be defined as a collaboration between the government and firms active in the private sector to develop public infrastructure systems. The construction of public infrastructure is the major purpose of the PPP. This public-private partnership divides the project between a private firm and the government. The government provides both operational and technical help to the private enterprise. The emergence of public–private partnerships in a range of nations, such as India and China, will continue to be a driving force behind the expansion of the real estate market because this is the case.

Rise of Residential Construction Industry

The increasing need for residential development is a major factor that is driving the expansion of the business. According to these projections, the sector of the economy devoted to building and maintenance will make up a much bigger percentage of the total economy. It is projected that the real estate market will grow rapidly due to the increase in the number of industries involved in residential development and the rise in the urban population. This is because more people will be living in cities.

Additionally, the rate of global urbanization has affected the residential construction industry in every region of the world. This impact can be seen in the past decade. Most urbanization occurs in the world's economies, which are seeing the most rapid expansion. Given that these nations are witnessing a significant rate of residential infrastructure development, the relevance of the real estate industry is further highlighted by this fact.

Global Real Estate Market Restraint

Volatile Economic Conditions in Latin America

Most of the countries that make up the Latin American region also struggled due to the complex internal issues they faced. This was in addition to the fact that the Latin American region struggled due to the difficult external environment. The economies of Venezuela and Brazil have fallen into a serious recession. At the same time, other nations' currencies, such as Argentina, Colombia, and Chile, have depreciated. This is a common phenomenon in the region. Most Latin America is experiencing an unpredictable political atmosphere, leading to economically hazardous situations in several countries and areas. The expansion of the region's economy is hampered by several obstacles, including inadequate infrastructure for transportation and logistics, non-tariff barriers to the movement of goods and services across international borders, and a scarcity of inward investment from outside sources. This, in turn, hurts the expansion of the region's real estate market.

Global Real Estate Market Opportunities

Increase In Government Investment in Infrastructure Development

The government is currently devoting many resources to developing various programs, all connected to enhancing the existing physical infrastructure. One of the key elements contributing to the construction of this pattern is the unceasing expansion of the economy, which has been going on for quite some time now. At the same time, the economies of emerging nations such as India and Indonesia, amongst others, have been improving, resulting in large-scale investments from outside the country. Among the developing nations that have benefited from this trend is the United States. This is a factor that, in turn, promotes the need for construction equipment in infrastructure projects that are being done by a wide variety of companies. In other words, the demand for construction equipment is being stimulated by this factor. These projects include things like the construction of highways and the expansion of airports. This would lead to good development possibilities for continuing the market's overall expansion.

Regional Analysis

Based on region, the global real estate market is bifurcated into North America, Europe, Asia-Pacific, and LAMEA.

North America Dominates the Global Market

North America is the most significant global real estate market shareholder and is estimated to exhibit a CAGR of 2.0% over the forecast period. The expansion of the construction sector and the rising prevalence of modular building are the primary factors propelling the market's expansion. Additionally, expanding container homes in the United States and Canada expands the real estate industry across North America. As a result of the increased demand for modular construction, several businesses are actively growing their operations through various business techniques.

Furthermore, it is anticipated that a rise in population and rapid urbanization will boost demand for the residential sector, consequently driving the need for housing units that can be purchased at an accessible price. A significant rise in the need for infrastructure in residential improvement and repair would also contribute to the growth of the market in the region. Due to increased building and infrastructure projects, more opportunities have become available for market participants.

Europe is anticipated to exhibit a CAGR of 2.5% over the forecast period. Real estate development in Europe is reliant on the building sector. Due to rising earnings, cheap interest rates, and significant net migration, there has been a significant demand for real estate in Europe. The market is anticipated to increase due to rising residential and non-residential construction activity and European home improvement spending. Most of this growth is attributed to Bulgaria, Romania, and Slovakia, which are predicted to have rising construction spending in the infrastructure sector, positively affecting market expansion.

Additionally, the industry is growing due to a rise in building spending. Russia makes up almost half of all construction spending in Eastern Europe, and this spending is anticipated to increase due to the building of both infrastructure and buildings, such as stadiums, hotels, and retail complexes, which will speed up market growth.

Asia-Pacific is considered a dominant market due to the region's high economic growth in developing nations like China, India, and Indonesia, which are also predicted to boost market expansion due to a rise in demand for residential construction. Moreover, the expansion of the Asia-Pacific real estate industry is facilitated by the region's rapid urbanization, robust economic growth, and population growth. Due to more infrastructure development projects, the real estate industry is expanding in Asia-Pacific, a developing economy. The economic recovery and growth in construction demand drive a large portion of the market expansion.

In addition, in the Asia-Pacific area, China is the main source of revenue. The construction industry formerly suffered from weak growth in Asia-Pacific developing nations. Still, it is anticipated to expand more quickly due to the global economic recovery and construction demand. The greatest construction projects are located in nations like China, South Korea, and India, which are also investing heavily in building skyscrapers, airports, and other public infrastructure.

LAMEA region's real estate market is anticipated to expand more quickly due to the expansion of infrastructure and buildings. The strengthening of the business climate and the rise in construction spending, primarily from Latin American and African nations, boost market growth. Brazil is one of the important markets in the LAMEA region with the highest realization level. Due to increased urbanization, the real estate industry in LAMEA is anticipated to expand. Qatar and the UAE continue to be prosperous investment locations.

In addition, an increase in disposable income, urbanization, and population growth will create further market expansion potential. This aspect is anticipated to increase demand for affordable, small-scale infrastructure in the home market. The residential market in the Middle East is driven by rising consumer spending, which results from better household net worth and improvements in general economic conditions, spurring market expansion.

Segmental Analysis

The global real estate market is bifurcated into property and business.

Based on the property, the global market is bifurcated into residential, commercial, industrial, and land. 

The land segment dominates the global market and is projected to exhibit a CAGR of 2.2% over the forecast period. The land segment includes all land transactions that do not involve the construction of any buildings and can be put to agricultural, commercial, industrial, or residential use. Because of an increase in the number of residential, commercial, and industrial construction projects being undertaken worldwide, the number of transactions involving land has increased. In addition, numerous real estate investment companies are concentrating on acquiring farm-related properties and agricultural land to lease those properties to farmers.

For instance, the Gladstone Property Corporation has expanded its agricultural holdings in California by purchasing more than 400 acres of property. It entered into leasing agreements with the various companies operating the property. These businesses will concentrate on cultivating a wide range of berry crops. As a result, an increase in these types of projects will likely lead to increased demand for land worldwide.

Based on business, the global market is segmented into sales and rental. 

The sales segment dominates the global market and is predicted to exhibit a CAGR of 2.5% during the forecast period. The sales sector includes all property sales transactions, including residential, commercial, industrial, and land sales. Real estate transactions can be broken down into a few categories: regular sales, short sales, and foreclosures. In addition, real estate brokers can attract customers by holding property auctions and choosing from a wide variety of other enticing possibilities in the market today. The quantity of buy-and-sell exchanges, including purchases and sales, is rising. This can be due to increased demand for residential, commercial, and industrial real estate, among other properties.

In addition, the industry's expansion has been helped by steps taken by the government to make the real estate sector more accessible to FDI. In addition, there has been an increase in the demand for flats in both the Asia-Pacific region and the Middle East, which has led to an increase in property prices. This aspect presents market participants with potentially profitable growth prospects throughout the projection period.

Recent Developments

• May 2022- The Bengaluru-based Prestige Group entered Mumbai's financial capital. It has plans to invest at least INR 7,500 crore (USD 9.06 billion) over the next four years to get a foothold in the foremost realty markets in the country. It will develop both residential and commercial projects in Mumbai.
• October 2022- Realty major DLF plans to launch new projects worth INR 3,500 crore (USD 4.23 billion) during the second half of this fiscal year, mainly in Gurugram and Panchkula, as it seeks to tap a rising demand. The company plans to launch around 3 million square feet across residential projects.