Over the next five years the global real estate market is on pace to grow by nearly one half to $13.7 trillion according to a report in August by RREEF, the property investment arm of Deutsche Bank. The report cited the world market will grow $3.9 trillion cumulatively. Europe, the Asia-Pacific region and the U.S. will grow $1.1 trillion, $1.3 trillion and $1.5 trillion respectively.
While emerging markets are expected to experience marked growth exceeding 100 percent, their scale will remain relatively small by comparison. By 2011, those markets will account for just 13 percent of the global market total compared to up to 70 percent for Western Europe and North America combined.
John Wickes, director of the Americas Research group for Jones Lang LaSalle says that given the strength of the global economy, it follows that we will see continued development especially in emerging economies that are becoming more transparent. “As the study points out, there is also a great deal of owner-occupied product in mature economies that can come to market at any time,” Wickes says.
In 2006, the value of the total space owned by professional real estate investors was estimated to be close to $10 trillion. The investible market, which includes owner-occupied space that may become institutional, was projected to be $16 trillion.
The report cites that while the global market is growing its overall performance is flat. As rental growth moves toward a cyclical peak and with less scope for further cap rate compression, the report says, the performance of the real estate markets is set to fall off over the next five years.