Nick Churton of Mayfair International Realty in London takes a look at the year ahead in the international real estate market and finds a great deal to be optimistic about.
A new year always brings fresh eyes and impetus to the real estate world as new buyers enter the market and agents and brokers look with enthusiasm to the year ahead. There is a spring in the step of buyers, sellers and real estate professionals.
So this is a great time to take stock, look at the months ahead and keep a weather eye on international indicators. Like never before the health of local real estate markets – especially in the luxury sector - is linked to the health of the global real estate community as a whole.
North America and the UK have seen an upturn in financial fortunes over the past few years – particularly through lower employment and greater GDP. The confidence this has brought to the real estate market in these regions has been significant. But in the UK this year with a general election in May, and in the US in 2016 with a presidential election, we can anticipate periods of low pressure and associated turbulence which will affect activity and possibly slow growth. This is to be expected and is just part of the political and economic cycle.
When once asked what was the greatest challenge for a statesman, post war British Prime Minister, Harold Macmillan, responded, “Events, my dear boy, events”. And it is events that are one of the greatest challenges for real estate around the globe.
With the Chinese economy at a twenty-five year low real estate could be one of that country’s industries to suffer. Russia’s weakened currency through plummeting oil prices, international sanctions and political concerns has influenced the flow of international property buyers from that country. In Europe and the Euro Zone some debt-ridden member countries hamper growth across the continent. One feels that all this could dampen real estate interest: plus many individuals who wanted to invest in safe-haven real estate markets elsewhere in the world have done so already.
Yet, paradoxically, despite these events many real estate markets continue to flourish, exemplified by New York and London. For many London’s real estate market is seen as the world’s reserve currency and the same can certainly be said of New York. Influenced by these cities other regions and neighbours benefit.
The year ahead will no doubt throw many unwanted and unexpected events at us. Sometimes they will be minor and sometimes, as in Paris recently, they will resonate around the world. But appalling and heartbreaking as many of these events are, the desire of individuals to house themselves and their families and to invest their money wisely is stronger than the activities of terrorists, despotic leaders and rogue nations. Nature is stronger than man. But it is man’s nature to provide and improve. Which is why, despite events, the real estate market in most of the developed world will remain a dynamic one through 2015 and beyond.