Today we will keep the introduction brief because the most important things are ahead. Analyzing the trends of the past, future, and present in the global real estate market will guide you on where to invest your savings.
What was
The beginning of 2024 has pleased analysts with a slowdown in the real estate crisis in global markets. The report from the Global Property Guide with data for the first quarter demonstrated not only list of countries with the highest rental yield, but also showed price dynamics when buying real estate. For analysis, the international company took 64 countries with the most promising and in-demand markets among investors. It is too early to talk about the end of the crisis. If we take into account inflation, and this needs to be done to understand the full picture, prices have risen in 31 countries and fallen in 33 (local currency prices were taken for analysis). The top thirty included:
- Poland - +6.78%;
- 🇬🇷 Greece - +7.44% ;
- Portugal - +8.5%;
- Montenegro - +24.1%
Greece attracts investors with its clean sea, whitewashed traditional houses, and low prices cost of maintenance real estate. The upcoming increase in "golden visas" has become an additional incentive to hurry with the purchase. Portugal is facing the initial stage of a housing shortage problem. Local developers are not in a hurry to fix the situation, so the increase in square meters is due to their shortage. As for Montenegro, this country with rich nature has focused on disrupting the luxury segment. Premium offers appeal to foreigners, which has led to a 30% increase in prices in nominal terms.
Not everything is so rosy in the states that until recently had no shortage of tourists wanting to stay longer:
- In Germany, at the beginning of 2024, prices decreased by 6% (taking inflation into account). This dismal trend has continued for the sixth consecutive quarter.
- Real estate in Turkey has increased by 52%. So what should it do among the "losers"? It is very simple - when taking inflation into account, completely different numbers come to the surface and it turns out that prices have not changed by 52%, but only by 9.8% and that they have not risen, but fallen.
What will be
If the crisis is fading, should we expect a revival? Many experts believe so. Price growth is forecasted throughout Europe and on the Foggy Albion. It may be quite insignificant, but it will still be present, at least in nominal price terms. Taking into account inflation in some countries, the cost of one square meter may decrease, but, nevertheless, the overall picture looks quite positive. According to the forecast S&P by the end of 2024, we can expect such changes in prices:
- Portugal - +3.5%;
- Spain - +4%;
- Ireland - +5.7%.
Not everything will be so joyful with real estate in the following countries:
- 🇩🇪 Germany - -0.1%;
- 🇫🇷 France - -3.5%;
- 🇮🇹 Italy - -3.7%.
In this trio, the decline in prices is related to the passivity of buyers as well as the inaction of developers. Developers do not see any special prospects due to the decline in demand, so the number of construction permits received this year is significantly less than last year. Interest in implementing new projects should be revived by trends in eco-friendly construction, conscious consumption, and the technology of smart home, which are becoming increasingly popular with each passing year.
What is it
We have talked enough about Europe, so it is worth shifting the focus in a slightly different direction to consider another country with an attractive real estate market. The American dream, which not so long ago warmed the hearts of many investors, is now in question. In the period from May 2023 to March 2024, foreigners purchased only 54,300 properties worth a total of $42 billion. This amount in itself says little, but compared to the previous year's figures, it is quite telling - the number of transactions decreased by 36%, and their value decreased by 21.2%. This has not happened since 2009, so it can confidently be announced as a new historical minimum. The reasons for this were:
- higher interest rates on loans;
- high cost of housing;
- Limited number of offers;
- purchase prohibition real estate to citizens from North Korea, Russia, China, Iran, Syria, Cuba, and Venezuela (so far it only operates in certain states).
Essentially, the first three points equally affect foreign and local investors. As for the last point, the Chinese make up a significant percentage of foreign buyers, so brokers and organizations that have previously worked with them are filing class action lawsuits and demanding that the restriction be declared unconstitutional.
Despite the general trend, wealthy foreigners continue to buy real estate in America. And they do it even more eagerly than Americans themselves. For example, if the median check of a "local" investor is $395,000, the amount is significantly higher for immigrants from other countries - $475,000. California, Texas, and Florida remain the most popular, accounting for 11%, 13%, and 20% of total transactions, respectively.