Global Real Estate Assets Rose 5% In 2020
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Global Real Estate Assets Rose 5% In 2020

Residential appreciation fueled the overall growth.

By Liz Lucking
Thu, Sep 23, 2021 11:02amGrey Clock 2 min

The insatiable appetite for home buying last year saw the world’s real estate assets—the most significant store of wealth globally—jump 5% in value to a record high in 2020, according to a report Wednesday from Savills.

Last year’s price appreciation left the total volume of global real estate assets at $326.5 trillion, a figure that’s more than all global equities and debt securities combined, and worth almost four times that of global GDP,  the estate agency said.

“Government stimulus in the wake of Covid-19 means there is plenty of capital at large, and real estate is viewed as a safe store as global investors search for income in a low-interest-rate environment,” Paul Tostevin, director of the Savills world research team, said in the report.

“While real estate’s capital value annual growth of 5% in 2020 is lower than those seen in securitized debt, equities and gold, at 17%, 20% and 29% respectively, it is the extra income component of property which makes it such a compelling purchase for many buyers,” he added.

The gains were driven by the residential property sector—which accounts for 79% of all global real estate value—a market that has thrived amid the pandemic as homeowners rush to larger homes better suited for working from home and lockdown living.

The sector saw its value increase 8% last year to US$258.5 trillion, pushed up in particular by activity in China.

China is home to 30% of the world’s residential wealth, and the segment recorded gains of 13% in 2020, driven by “strong price growth coupled with the delivery of new supply,” Savills said.

After China, the U.S. accounts for 11% of the global residential wealth, and the two countries along with Japan, Germany, the U.K., France, South Korea, Canada, Italy and Australia, make up 75% of the global residential total.

The value of global commercial property, meanwhile, fell 5% in 2020 to US$32.6 trillion, and is expected to rebound in 2021 and hit a new peak by the end of the year.

Reprinted by permission of Mansion Global. Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: September 22, 2021.



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London’s Luxury Property Market Turns a Corner

After more than a year, prices have finally levelled out in prime central London, while outer London saw a small uptick in high-end prices from the previous quarter

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The first quarter of the year brought some long-awaited signs of recovery in London’s luxury housing market, offering the first positive quarterly price growth since September 2022, according to a report from Savills on Wednesday.

After six consecutive quarterly price falls, luxury home prices in central London levelled out in the first three months of the year, with a 0.1% quarterly uptick in prices. The £3 million to £5 million (US$3.79 million to US$6.32 million) market saw a slightly larger increase of 0.3%.

Outer London’s luxury market saw greater quarterly price growth, with home prices up 0.8%, as some stability returned to mortgage costs and lured more buyers back to the market, according to the report.

All of this is evidence that the market is “in early stages of recovery,” according to Lucian Cook, head of residential research at Savills.

“The outlook for the housing market has certainly improved, partly because the mortgage market has recovered more quickly than expected,” Cook said in the report. “With the first rate cut rapidly coming into view and recessionary risks easing, greater stability has returned to the cost of mortgage debt, which has positively impacted domestic prime markets, where many buyers rely on borrowing, most notably in leafy outer prime South and West London, as well as the commuter belt.”

Outside of London, prices across the U.K. saw no quarterly growth heading into the beginning of the spring market, which is expected to bring higher levels of buyer activity in many regions.

Suburban regions saw prices dip just 0.1%, while urban areas—like Edinburgh and Glasgow in Scotland, and Bath and Oxford in England—saw prices increase by 0.6%.

Cook said regional buyers are more likely to be concerned about market uncertainty than London buyers in the lead up to the general election.

“As a result, buyers are still expected to be less committed until the dust has settled,” he said.

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