International Real Estate Markets

international real estate

According to the 2012 Global House Price Index (GHPI), house prices around the world rose by an average of 4.3%. Although there were stronger conditions across many world regions , these were offset by ongoing issues in many European markets.

Reports from the GHPI and National Association of Realtors (NAR) indicate that in 2013 a majority of international real estate transactions were generated by individuals purchasing residential (lots or built units including family homes, apartments, condominium units). Different reporting agencies may classify residential purchases as vacation/second home market or residential tourism, making real statistics difficult to qualify.

According to the NAR (2013 Profile of International Home Buying Activity), international sales for U.S.A. properties topped $ 68.2 billion in the 12 month period ending March 2013. While that is an impressive number, the U.S. comes in at No. 12 on the Global House Price Index.

Global Economics reported in the Global Real Estate Trends, that the United States has maintained its near top standings in their international ranking, with inflation-adjusted home prices, albeit investors are leery of the word "adjusted". The demand side of the equation is being reinforced by reasonable job growth and housing affordability (close to record lows), and lower inventory. Reports also indicate that rising mortgage rates will slow recovery and improved household finances, rising consumer confidence and lending conditions are lessening restrictions.

Scotiabank's Global Economics released a report Global Real Estate Trends that said a number of European property markets are showing early and positive signs of recovery, stemming from an uptick in economic movement and consumer confidence. The U.K. housing recovery is stabilizing, supported by stimulus measures introduced in 2013. Standing out in Europe are Sweden and Switzerland, both reporting steady price growth in the second quarter.

The Global Index and other real estate trend reports show Asian property markets remaining steady even with slowing regional growth. Australian, Indonesian and Thai property markets also gained momentum midyear in 2013, while conditions remain very slow in India and South Korea, with prices contracting. Asian markets were predicted to see exponential growth in the early 2000's but super emerging markets like Latin America were seen to have a significant drag on those growth predictions.

Canadian housing activity remains optimistic with low borrowing costs and balanced market conditions attracting buyers, although slowing job growth and a rise in fixed mortgage rates will slow activity later in 2013 and into 2014. Rising prices in some of Canada's largest urbanized areas, mainly for single-family homes will also have an impact in 2014.

The Global Real Estate Trends report said that Latin American property markets are fluctuating regionally and are "mixed", with strong growth in Chile, Peru and Colombia , having good domestic demand and stronger labor markets. Real house prices in Mexico remain flat-lined, with continuing inflation. In Brazil's previously booming housing market, a slowing economy and high interest rates have resulted in significant slowing.

Countries That Stand Out

Ecuador has seen more than six years of eight percent annual appreciation nationwide and double-digit appreciation in some markets, but real estate developers and agents say they are seeing a slowdown in the appreciation rate as well as volume of sales. The Ecuador Real Estate Association reports a record number of properties for sale and the sales cycle is longer, indicating signs that the market is near a cap.

Colombia is continuing its expansion cycle, although at a much more moderate pace. Projections between 2013 and 2016 indicate the Colombia Real Estate sector will only grow slightly above its previous long-term levels. In terms of sustainability the sector risks oversupply and cost pressures in the value chain. According to BBVA Research Colombia (BBVA), estimates for investment in buildings are projected for 3.8% annual growth in the 2013-2016 period. This forecast takes into account a slowing in high-end home sales, and a foreseeable demand increase in commercial demand and social housing needs.

Belize's real estate market saw significant improvement in 2012 according to Global Property Guide, after slow sales in 2010 and 2011. This is due to a continued response to the U.S. financial market. This trend is expected to continue through into 2014. The 2012 Central America House Price Snapshot prompted the Association of Real Estate Brokers of Belize (AREBB) to say Belize has one of the highest-priced real estate markets in Central America.

Panama, according to a 2012 report by HSBC, has sustained an average 8% yearly GDP growth over the past five years making it one of the strongest economies in all of Latin America. Panama continues to gain international awareness from a variety of sources, for example, Forbes recently listed Panama #61 on the Best Countries for Business report. Economic growth will continue to be bolstered by the Panama Canal expansion project to be completed by 2015 at a cost of $5.3 billion – this project is the largest in Latin America and has pulled a massive influx of other development monies into the region. Industry experts are predicting continued growth in real estate markets, but at a slower pace for sectors such as condominiums as sales prices appear to be reaching peak growth levels.

The Costa Rica Real Estate market, according to the Wall Street Journal, is on track to round out the year with a rise over 2012 numbers. The buyer/seller trend insights are part of the updated market overview report for 2013. The report cited from Costa Rica Real Estate (CRREC) analyzed trends and projections heading into 2014 indicating Costa Rica's proximity to the U.S., significantly growing numbers of baby boomers looking south for retirement opportunities, and growing European investment are all positive indicators showing Costa Rica will continue to see positive growth in 2014 and beyond.

Turkey's economic expansion, attractive investment climate and maturing real estate market are building a strong foundation for institutional and private investment in Turkey Real Estate. Moreover, recent major transactions by foreign investors point towards a positive outlook for Turkey's long-term basics.

The housing market in Turkey is driven by demand fueled by a combination of population growth, ongoing migration, increasing urbanization, disposable income growth and affordable financing causing demand for new housing to escalate sharply. It is estimated that 8 million new homes are needed to fulfill the needs of urban transformation with socio-economic growth, ensuring market positive movement over the next several years.

Mexico is falling into the crosshairs of U.S. real estate investors, as businesses are starting to expand under a new government that came to power in 2012. An emerging trend in Mexico is a growing number of new real estate investment trusts (REITs). The first public REIT was listed in 2011.

Although some investors say they will continue to avoid investing in Mexico because of security concerns related to drug-related violence, Mexico is on the uptick and starting to get more international investor attention again.

Latin America as a Whole

The Urban Land Institute with their extensive report on Emerging Trends in Real Estate said that leading Latin American countries are presenting opportunities for real estate developers and investors, but indicated a mastery of local markets and finding proper local partnerships are barriers to entry.

The Emerging Trends report highlighted three key trends driving growth going forward:

With all of these reports cited above the common points to positive growth going forward from 2013 into 2014 show that the performance of the world's mainstream housing markets will depend on finding some economic stimulus, softening lending criteria and building buyer confidence, as well as recognizing and targeting the needs of developing demographics.