The real estate market is going global
GUEST OBSERVATION
National real estate markets around the world, like Australia's, are being internationalized.
That's one of the things I'll be talking about from the stage of the G20 curtain-raising event, the Global Cafe, this 12 November.
The G20 meeting is a coffee klatch for the leaders of the world’s biggest economies — and this year it’s in Brisbane. This particular meeting is an important one for real estate. The G20 hopes to find a way to raise economic output by 2% and add $2 trillion to the world economy.
That kind of growth could lead directly to more than a billion dollars of new real estate transactions in Australia alone, with both international and domestic buyers included. Each billion in sales generates some $25 million in agent commissions.
This positive impact is one way of measuring how the real estate market is going global. In total, the world’s property investment market will reach US$1.33 trillion by the end of 2014.
Highrise Harry, also known as Harry Triguboff, managing director of developer Meriton, believes that international buyers are "an important factor in maintaining business confidence and giving developers the impetus and security to embark on new projects". That is what he told the Parliamentary Inquiry into foreign investment in residential real estate.
He also wrote that foreign investment is responsible for "directly increasing the supply of new housing".
Personally, I’m most familiar with the increase in Chinese investment. I don’t think Gough Whitlam or former Chinese Premier Zhou Enlai would have in their wildest dreams imagined the flood of money and people now rushing back and forth between China and Australia, when they shook hands in Beijing back in 1971.
China has since transformed itself from an undeveloped country into the world’s soon to be largest economy. It is the nation that adds the most to global growth, the second largest buyer of diamonds, top drinker of red wine, largest growth market for iPhones and Australian milk and nearly the largest consumer of oil.
China is growing so rapidly that, just over the past three years, it used 39% more cement than the USA used during the whole 20th century.
With their incredibly high savings rate (greater than 50%), Chinese have money to invest in Australia. High net worth Chinese allocate 16% of their assets to overseas real estate.
Last year, Chinese investors were approved for $5.9 billion of investments in Australian real estate.
For vendors, internationalization is another way of saying “more potential buyers". It’s not just the Chinese. It’s also Kiwis, Indians, the British and more.
That’s why I believe the next home you sell could go global.
Andrew Taylor is the co-CEO and co-Founder of Juwai.com, recent winner of the "most influential international property site in China 2014" award from the country’s peak e-commerce body.
Juwai has created a global platform for real estate information servicing the world’s Chinese communities. Started in 2011, Juwai is a services-based business on a strong IT platform that works with millions of Chinese property buyers around the world engaged in global property investment.