Global investment in realty sector to reach $45 trillion by 2020

MUMBAI:Driven by rapid urbanisation and demographic changes, especially in emerging markets, global investment in the real estate sector is likely to increase 55 per cent to $45.3 trillion by 2020 from $29 trillion in 2012, according to PwC.

PwC in a report ‘Real Estate 2020: Building the Future’ said that the investment in developing Asia-Pacific countries, which includes India, is likely to rise by 140 per cent to $10.2 trillion by 2020 from $4.3 trillion in 2012.

“Rapid urbanisation and demographic changes, especially within emerging markets, will lead to substantial growth in the real estate investment industry over the next six years,” PwC Executive Director (Capital Markets) Shashank Jain said.

The expansion will be the greatest in the emerging economies, where economic development will lead to better tenant quality and, in some countries, clearer property rights, and will play out across housing, commercial real estate and infrastructure.

“Real estate is an integral part of the emerging markets’ growth phenomenon. In India, for example, real estate has played a large part in driving economic growth. It’s an exciting time for the real estate sector, in an emerging country like India,” he said.

According to the report, the investment in Asia-Pacific countries is highest compared with the US, Europe, Latin America, developed parts of Asia Pacific and even Sub Saharan Africa and Middle East and North Africa.
Jain observed that intense competition for prime real estate will force real estate managers and investors to seek out new opportunities for yield.

“Yet the growing and changing real estate world will present them with a far wider range of risks, which they must be equipped to manage,” he said.

Meanwhile, the growing middle class and ageing populations in these emerging economies are boosting th e demand for newer types of real estate, Jain said.

While office, industrial, retail and residential will remain the main sectors, affordable housing, agriculture, health-care and retirement accommodation will become significant sub sectors in their own rights, he added.
Swiss economic growth slowed to a crawl at the end of 2013, official data showed Thursday, amid concern that the strong Swiss franc and recent vote limiting immigration from the EU might further hamper the country’s economy.

Switzerland’s economy grew just 0.2 percent during the final three months last year, compared to the previous quarter, according to the statistics from Switzerland’s State Secretariat for Economic Affairs, or SECO.

Fourth quarter growth, which had been expe ..
Fourth quarter growth, which had been expected to slow, was thus below the 0.5 percent hike seen in the third quarter and at the low end of expectations.

Analysts polled by the AWP financial news agency anticipating growth of between zero and 0.5 percent during the three-month period.

“The overall figures are a bit disappointing,” J. Safra Sarasin analyst Alessandro Bee told AFP.
Compared to the same period a year earlier, the wealthy Alpine nation saw its economy grow 1.7 percent, which remained lower than the third quarter’s annual growth rate of 1.9 percent.

SECO meanwhile said it now expected full-year growth for 2013 to tick in at 2.0 percent, up from 1.0 percent in 2012.

This initial estimate is in line with the central bank’s forecast that growth would slow in the fourth quarter and that the economy for all of 2013 would swell between 1.5 and 2.0 percent.
Capital Economics analyst Jonathan Loynes cautioned though that the fourth quarter slowdown “may raise fears that the economy is finally succumbing to the strength of the Swiss franc.”

Switzerland is not a member of the European Union and is thus outside the eurozone.
The Swiss economy has long been one of few bright spots on the European map, but the surging value of its franc has created headaches for exporters, whose margins can easily be eroded by unfavourable exchange rates.

To counter this effect, the central bank in 2011 set an exchange-rate floor of 1.20 francs to the euro.
Loynes pointed out that the franc had long hovered near the floor, but stressed that “the breakdown of growth by expenditure components provides some reassurance on this front,” since the slowdown appeared to mainly be attributed to a hike in imports.

During the final three months of last year, imports swelled 1.4 percent, amid a 0.7 percent hike in household consumption.
Exports, not including luxury goods like precious metals and gems and artwork, meanwhile plunged 1.7 percent after showing strong growth during the previous quarter.

Exports in Switzerland’s important chemicals and pharmaceutical sectors were especially hard-hit, SECO said.
Bee said the drop in exports was disappointing, but added that “I think the numbers reported in the third quarter for exports were too positive,” so the comparative drop was perhaps overstated.

He also stressed that domestic demand was still strong and should continue to boost growth going forward.
At the end of 2013, many analysts revised up their outlook for Swiss economic growth for this year, as they anticipated that exports would start picking up again.

But earlier this month, the country voted by a razor-thin margin to establish quotas on immigration from the European Union, putting in jeopardy a whole series of agreements with the bloc, its main trading partner.

Many observers have expressed concern that the prevailing climate of uncertainty might weigh heavily on investments in the country and its products.

Bee said Thursday he thought the effects of the vote would be felt more in the long term.

“The limitation of free movements will have an impact but not in the short term,” he told AFP.
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