The world is faced with the pandemic and the consequent global recession. More than that, trade tensions, which have formed between China and the US have all had a significant impact on how people feel about real estate in Europe, the US, and around the world in the general.
However, despite these uncertainties, research suggests that there is continued potential in real estate investment, even though it may be even more focused on the long-term rather than the short-term.
Trends in Europe
PWC reports that those who are established in the European property market are firm in their convictions that real estate remains an appealing investment asset. This is despite the current economic and political instability.
Seeing as interest rates are expected to remain lower for an extended period of time and bond yields are still mostly negative, real estate investment continues to be an intriguing option to most investors.
In terms of specific locations, Paris, Berlin, Frankfurt, Munich, Hamburg, Amsterdam, Madrid, and London all stand out as being the most desirable locations. These cities stand out as having exceptional transport connectivity with technology being used in order to create innovative mobility solutions. These aspects are big contributors to the economic development of European cities, and as such, have a direct effect on the possibility of lucrative real estate investment opportunities.
These, however, are the biggest trends affecting real estate in Europe:
One of the most sure-fire ways to stay ahead of the curve and succeed in the real estate market is to work technologically smarter, and faster. Technology has been noted as having a significant long-term effect on the real estate market.
Climate change has been identified as being one of the biggest factors that will have an effect on real estate in the coming 30 years. According to research, 40% of global emissions arise from real estate. The aim is to reach net carbon neutrality which has an effect on the way in which buildings will be constructed, utilized, and also maintained.
Increased construction costs
Labor and material costs have seen an average inflation rate of 5-7% every year, and these construction costs have had the largest effect on real estate business in Europe.
Seeing as there is a distinct need for affordable housing, numerous governments around Europe have proposed setting up rent controls which will have a significant impact on the short-term investment potential of real estate. However, the long-term investment potential still stands.
Trends in the US
Despite the pandemic, the American housing market is still thriving. In the past year, new home sales have increased by 43.2%, and homebuilder feelings are more positive than it’s been in 35 years.
These are the prominent trends in the US:
A move to the suburbs
Even though inner cities have more trouble, the country and suburbs are thriving. A need for locations, which are increasingly isolated is prompting this shift.
Opportunity for local buyers
At present, there is a lack of international buyers, but this is very good news for local investors seeing as an increase in international buyers tend to result in amplified home prices.
Although there is no doubt that the tourism and vacation industry had a lot of trouble in the beginning of the pandemic, this trend seems to have been ameliorated. Most people want to feel like they are on holiday without risking their health, and isolated holiday homes present just this opportunity. As such, homes to rent for an indefinite (or set) amount of time is a valuable commodity, especially as most people will be working from home for a while.
What to surmise from the trends in the EU and US
Taking the above trends into consideration, it is clear that despite the challenging times, real estate investment still stands out as a lucrative long-term investment. However, the way in which it is managed may be changed.
Property investing can be done in numerous ways including wholesaling, buying-and-flipping, and buying-and-renting. Each has its own benefits, and its own risks, but each has immense potential in providing supplemental income which has the possibility of turning into a sole income.