Savills has examined the key trends set to determine future global real estate investment activity in a series of articles and interviews launched today as part of its Impacts research program, where the international real estate advisor studies the various social, environmental, demographic and technological ‘tipping points’ immediately facing global real estate.
While the ongoing trade conflict between the US and China will be overshadowed by the impact of the Covid-19 pandemic this year, it has already accelerated shifts in global trade patterns, says Savills. As Chinese manufacturing has relocated, freeing up large tracts of land for commercial and residential use on the edge of major cities, other nations have benefited. These include Vietnam, where manufacturing exports to the US rose by almost 36 percent in 2019 making it the US’s fastest growing trade partner last year, and India, Malaysia, Thailand and South Korea. Long term, trade difficulties with the US may well accelerate the formation of a regional free trade block; a Regional Comprehensive Economic Partnership made up of 16 Indo-Pacific nations, including China, Australia, Japan, Indonesia and South Korea, may well be signed this year creating the world’s largest free trade area.
Separately in Impacts, Savills highlights that real estate associated with the life sciences sector is going to be one of the fastest growing targets for investment, as companies in the sector look set to accelerate growth and become prevalent in more geographies. Savills says that although the $2.5 trillion of VC investment, a major predictor of future life science business growth and therefore demand for real estate, was focused on the US and China over the last five years, countries that saw particular strong growth in 2019 include India (+180% y/y), Spain (+83% y/y), Australia (+79% y/y) and Austria (+453% y/y).
““Basing investment decisions on short-term events can have long-term consequences. While many companies are focusing now on responding to current disruptions it is easy to forget the importance of strategic planning. If you are aware of long-term trends you can act now, but in a way that will allow you to be prepared for the market in 24 months. This creates a great competitive advantage, especially in such a long-term investment as real estate," Tomasz Buras, CEO at Savills in Poland, said.