Driven by rapid urbanisation and demographic changes, especially in emerging markets, global investment in the real estate sector is likely to increase 55 per cent to $45.3 trillion by 2020 from $29 trillion in 2012, according to PwC. PwC in a report ‘Real Estate 2020: Building the Future’ said that the investment in developing Asia-Pacific countries, which includes India, is likely to rise by 140 per cent to $10.2 trillion by 2020 from $4.3 trillion in 2012.
“Rapid urbanisation and demographic changes, especially within emerging markets, will lead to substantial growth in the real estate investment industry over the next six years,” PwC India executive director and leader, Real Estate Transaction Services, Shashank Jain said.
The expansion will be the greatest in the emerging economies, where economic development will lead to better tenant quality and, in some countries, clearer property rights, and will play out across housing, commercial real estate and infrastructure. “Real estate is an integral part of the emerging markets’ growth phenomenon. In India, for example, real estate has played a large part in driving economic growth. It’s an exciting time for the real estate sector, in an emerging country like India,” he said.
According to the report, the investment in Asia-Pacific countries is highest compared with the US, Europe, Latin America, developed parts of Asia Pacific and even Sub Saharan Africa and West Asia and North Africa. Jain observed that intense competition for prime real estate will force real estate managers and investors to seek out new opportunities for yield.
“Yet the growing and changing real estate world will present them with a far wider range of risks, which they must be equipped to manage,” he said. Meanwhile, the growing middle class and ageing populations in these emerging economies are boosting the demand for newer types of real estate, Jain said.
While office, industrial, retail and residential will remain the main sectors, affordable housing, agriculture, healthcare and retirement accommodation will become significant sub sectors in their own rights, he added.