Real estate is the highest valued asset class in the world and is growing.
Research collected from Savills reveals that global real estate is valued at USD 228 trillion. This is an increase of five percent from 2016. These staggering figures are even more impressive when you consider that annual GDP for 2015/2016 increased by 2.3 percent. That all gold ever mined totals USD 6.5 trillion. Plus stocks, shares and securitised debt accumulates to USD 170 trillion. The value of real estate has grown significantly since the global financial crisis of 2008 and its role has changed.
Property is a popular asset class as it is easily understood. It is tangible and essentially everyone needs somewhere to live. Plus income generated from property is more attractive than interest rates and on the whole yields more. Property has become more liquid over time, with the quashing of previous thoughts of it being a risky asset class.
The sector that has has grown the fastest is commercial property. Increasing by seven percent it has outperformed global bonds that only grew two percent, but global equities took the lead growing nine percent.
Residential property holds most of the value accounting for 75 percent of real estate stock at USD 168.5 trillion. A result of the 2.05 billion households across the world that mean the average home costs USD 82,000. Despite seven percent of the world’s population being in North America it holds 22 percent of the residential property assets. Europe trumps this with 23 percent value but has marginally more people at 11 percent.
Whilst much of the wealth is concentrated in the developed corners of the globe, the less developed countries undoubtedly have the most potential. 19 percent of the world population live in the Middle East and Africa but only 6 percent of the overall global residential property value is held here. The value of property in Asia is growing too with many seeing property as important asset class spurring on its value.
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