Economic factors impacting global real estate, according to the Knight Frank Global Research Network.
In a recent research report using real-time economic indicators, the Knight Frank Global Research Network has been able to determine the most important factors that will influence global real estate decision-making going forward.
There’s no doubt that the world’s real estate markets have seen dramatic changes over the last nine months driven by COVID-19. Not only have real estate professionals had to adapt to the challenges of working under the limitations of an international pandemic, but supply and demand for real estate and customer expectations have seen changing trends.
Safe Havens and Traditional Markets
The report predicts that safe havens and traditional markets are likely to benefit from the continuing threat of a resurgence of the virus, and the existence of low mortgage rates worldwide will boost transactional activity. According to the 2020 Knight Frank Global Buyer Survey of over 700 respondents in 44 countries, 61% of respondents plan to work from home more often, which will drive the demand for home offices. In turn, this will increase demand for urban logistic facilities and data centers to facilitate the increase in remote technology networks. More flexible work styles with greater choices is anticipated, be it working from home or the office or another location. The respondents see a transition towards locations that support specific work tasks rather than work roles.
Lockdowns and Homebuying
After having to endure some form of lockdown, 45% of respondents say they are more likely to buy a detached family home than they were prior to COVID-19. Demand for apartments has remained static with 52% of respondents stating that their attitude to apartment living has not changed. Although 64% of respondents say that a home office is now more important, some 32% of respondents say that their working lifestyle will change little—suggesting that the office still has an important role to play as a hub for innovation, collaboration, education and socialization. Some 66% of respondents say that a garden and/or outdoor living space are now more important with the lockdown having emphasized the connection between well-being and access to the outdoors.
Travel restrictions and quarantining have reduced cross-border travel, which has reduced demand from international investors. Domestic investors and international investors prepared to buy property sight unseen will be able to take advantage of this situation in the short term. Residential markets driven by local demand are likely to see higher transactional levels than those serviced by international buyers. Knight Frank data analysis by region shows that prime property prices in Australia and North America were the most resilient in the world in Q2 2020, while Europe and Asia saw prime property prices weaken significantly. Countries prepared to open borders without restrictions may be at a significant advantage to influence the inflow of investment capital in 2021.
Peter Gilmour is REAL Trends chief foreign correspondent and Chairman Emeritus and co-founder of RE/MAX of Southern Africa.