The global property market is facing changes at the hands of technological innovations, political fluctuations, infrastructure transformations, biological, economic and demographic dynamics and a slew of other surprises that are yet to emerge.
While uncertainty clouds the outlook for Europe, experts predict that emerging economies will take over leading positions in the world property market within the next 30 years. The global urban population is expected to soar by 75% to 6.3 billion people through 2050, as compared to 3.6 billion registered in 2010, PwC reported.
The United Nations (UN) has calculated that planet Earth would host 37 megacities by 2030 (up from 23 today), including 12 cities located in emerging markets. So what particular countries are poised for significant property growth over the next 10 years? Perhaps GDP forecasts by PwC will help us shed some light on the global prospects.
One of the biggest agricultural spots in the world, Brazil, is expected to increase its GDP in PPP terms to $4.44 trillion by 2030, from $3.14 trillion in 2016, becoming the world’s fifth largest economy by 2050, with a $7.54 trillion GDP.
Sao Paulo and Rio de Janeiro are ranked fifth and 20th, respectively, in the list of the UN megacities. The population of Rio is expected to rise 9%, reaching 14.174 million people by 2030, while Sao Paulo is expected to hit 23.4 million — up 10% compared to 2016.
As of July-September 2016, house prices in Brazil slipped 0.2% quarter-on-quarter, according to Global Property Guide data. Before 2012, the country saw massive growth in the property market (in the third quarter of 2008, prices jumped 4.23%), replaced by a downturn due to an economic slowdown and political insecurity, says Moody’s.
Germany’s GDP (PPP) forecast for 2030 amounts to $4.7 trillion, up from $3.98 trillion posted in 2016. In 2050, the German economy may reach $6.14 trillion.
Berlin has already established itself as a centre for start-ups and entrepreneurs, attracting talent and investment from all over the globe. It was ranked by Savills as the world’s ninth leading tech city.
As of the second quarter of 2016, German quarter-on-quarter house price growth accelerated to 3.72%, compared to a 1.35% increase registered a decade earlier in April-June 2006.
At this point, researchers predict that Russia will remain in sixth place with respect to its GDP (PPP) rating through 2050. The forecast for 2030 amounts to $4.74 trillion, up from $3.8 trillion posted in 2016. In 2050, the country is expected to reach $7.13 trillion.
Ranked 22nd in the list of megacities, Moscow’s estimated population is expected to slide to 12.2 million in 2030, down from 12.6 million in 2016. Due to unregistered inhabitants and a range of other factors, actual numbers may differ considerably from the official statistics.
In the second quarter of 2006, the Russian house price index jumped to 9.66% compared to a slight 0.97% quarter-on-quarter fall in April-June 2016.
Indonesia is expected to post a $5.4 trillion GDP (PPP) in 2030. By 2050, the beloved resort destination could move into the fourth place, overtaking advanced economies like Japan.
The UN predicts that Jakarta will become the 27th biggest megacity in the world by 2030 with a population of 13.812 million people (up 32% from 2016). “The city’s middle class continues to expand, which carries big implications for the growth of the retail sector, and the demand and supply of different kinds of space,” according to a recent JLL report.
The Indonesian government has already taken several steps to ease the process of residential property purchases for foreigners.
Over the last nine years, Indonesian house prices have been on the rise: 0.67% quarter-on-quarter growth was posted in April-June 2007 and in the second quarter of 2016, the prices saw a 0.36% rise.
Japan, with its $5.6 trillion GDP (PPP) forecast, is expected to remain in fourth place in the ranking through 2030, but to subsequently sink to eighth place by 2050, by which point it is expected to be overtaken by Indonesia, Brazil, Russia and Mexico. In 2016, the Japanese GDP totaled $4.9 trillion.
The UN predicts that Tokyo will become the absolute champion among the planet’s megacities by 2030, while Osaka will occupy the eighth position in this respect. Savills ranked Tokyo 18th in its Tech Cities report, noting that the city offers a rich variety of entertainment, retail, nightlife and cultural experiences, as well as wellness facilities and parks.
If the country meets its ambitious target of attracting 40 million tourists in 2020, when the Tokyo Olympics and Paralympics will take place, some 50,000 additional rooms will be needed across the country, according to the Japan Tourism Agency.
Japanese house prices slipped 0.02%, quarter-on-quarter, as of April-June 2016, compared to a 0.89% increase in 2006.
India is expected to achieve a $19.5 trillion GDP (PPP) in 2030, up from $8.7 trillion in 2016, and to overtake the U.S. by 2050, securing second place.
The UN forecast Delhi to become the second most populous city on the globe by 2030, with a population of 36.06 million people (up 36% from 2016), while Mumbai, Calcutta, Bengalaru and Chennai are expected to take the fourth, 14th, 28th and 30th slots, respectively.
India’s leading tech capital, Bengalaru, ranked 20th in Savills’ Tech Cities list. “The city’s low labour costs and wealth of technical talent make it particularly attractive for outside investment,” according to the report.
The young work force in India is approaching home-buying age and is expected to significantly drive the property market over the next decade, according to recent Morgan Stanley research. “The confluence of factors, including a projected sharp increase in the country’s per capita income, further urbanization and a firmer federal hand on regulations, could push annual property market sales, which were $105 billion in 2015, to $462 billion by 2025,” the report said.
Property sales are expected to grow at a 14% compound annual rate from 2016 through 2020 and at 18% from 2020 through 2025 — dynamics comparable to China’s 22% overall annual growth rate within 2004-2015, experts say.
House prices in India rose 0.68% quarter-on-quarter as of January-March 2016, down from 3.77% growth registered in April-June 2010 (start of quarterly data reports).
2. The United States
The U.S. GDP (PPP) may reach $23.5 trillion by 2030 from the current $18.6 trillion. The forecast for 2050 is $34.1 trillion.
The UN forecasts New York and Los Angeles to become the world’s 10th and 21st most populous cities in the world, respectively, within the next 13 years. Austin, Seattle, San Francisco, Boston and New York are among the most promising high tech destinations for talents and investment.
In the last decade, U.S. house prices saw falls and recoveries: a 1.21% quarter-on-quarter increase was registered as of July-September 2016, while 10 years ago in the same period, prices rose 0.43%.
First place goes to China, with a projected GDP (PPP) of $38 trillion in 2030 – up from $21.3 trillion in 2016. In 2050, China is expected be at the top the rating with an ambitious forecast of $58.5 trillion.
By 2027, the country is expected to take a defining step in its economic journey, finally “break out of the middle-income trap and join the rarified ranks of high-income society,” reaching a per capita gross national income of around $12,500, according to Morgan Stanley experts. With what is projected to be the second largest population on the planet in 2050, China is expected to enjoy the country’s modernised economy, which is likely to absorb Hong Kong and Macao by that time.
Six Chinese cities are included in the UN’s ranking of future megacities: Shanghai, Beijing, Chongqing, Guangzhou, Tianjin and Shenzhen, in third, sixth, 16th, 19th, 24th and 26th places, respectively.
House price dynamics in China have improved over the past decade: a 6.62% increase was registered as of April-June 2016, compared to a 0.72% uptick in the third quarter of 2006.