Cautious optimism has set the tone for the global investment market through the first months of 2019. With a backdrop of political uncertainty and slowing economies, global growth plateaued to 3.7% real GDP in 2018 and is projected to decline to 3.5% in 2019, according to the International Monetary Fund (IMF).
Global construction output growth is on a path to accelerate marginally to 3.7% in 2019, according to a report by the Construction Intelligence Center, before easing back in the latter part of the forecast period, reflecting trends in some of the largest markets, notably China and the US.
Global real estate is performing well in this market. With advances in digital innovation and building practices such as modern methods of construction becoming increasingly prevalent, there is a continued demand for real estate to flex and supersede both investor and consumer demand. There has been increased demand for the services of online corporations and hence robust levels of demand for logistics assets. This sector has grown and continues to perform well.
Still growing strong: India
The BRIC economies have a reduced forecast growth by the IMF, in line with a cautious start to 2019 for global markets. India is now leading the pack with 7.4% real GDP growth. With China slowing down, India is still growing, mainly down to the size of economy, population, exporting skills, the middle class growing domestically and encouraging international trade. We’re seeing that global overseas funds and investors have allocated large capital to be deployed on major commercial projects for international corporations.
Continent to watch: Africa
Within the top ten countries on the IMF real GDP growth chart, five listed are in Africa, achieving over 7% real GDP growth. Natural resources and agriculture are a huge pull to the continent, with most being exported around the world. There is a significant opportunity to continue to develop infrastructure and up-skill resources which are currently under-utilised.
However, there is a long way to go, and The World Bank needs to deploy cash to support and attract global companies to invest. Overall, if this emerging continent continues to achieve the high levels of growth, it will have the potential in the future to supplement the world’s largest economies.
With several of the world’s mature markets slowing and political unrest in specific areas across the Middle East, the UK continues to offer a safe haven for investors in commercial real estate. The current weakness of sterling due to political uncertainty, combined with attractive, long-term institutional 15-25 year leases, has been a pull. There is an opportunity for investors from the US, Middle East and Asia Pacific to preserve wealth through long term holding products, including real estate.
Despite a continued slowing of real GDP growth, new emerging economies have the foundation to challenge and sustain international real estate demand.