The real estate market has always been a dynamic and exciting sector, and it continues to thrive despite challenges posed by the COVID-19 pandemic. With the increasing population and a strong desire for personal living spaces, the global real estate market is projected to expand significantly in the coming years.
Rising Demand for Personal Household Space
As of 2021, the real estate market was valued at a whopping USD 3.69 trillion, and it is expected to grow at a compound annual growth rate (CAGR) of 5.2% from 2022 to 2030. This growth can be attributed to multiple factors, including the increasing population and the shifting preferences of consumers.
U.S. real estate market size, by property, 2020 - 2030 (USD Billion)
The residential property segment has emerged as the dominant force in the market, accounting for a revenue share of 35.5% in 2021. Millennials, in particular, are driving this growth, with an increased inclination towards homeownership. For example, the homeownership rate among millennials rose to 47.9% in 2021, up from 40% the previous year.
Impact of the Pandemic
Undoubtedly, the COVID-19 pandemic has had a negative impact on the real estate market. The initial months of the crisis saw a significant decline in activity, especially in the retail sector, due to strict lockdown measures and movement restrictions. Construction projects were delayed, and the industry experienced a period of sluggish growth.
However, the market began to rebound as soon as restrictions were lifted. Potential buyers ramped up their search for and purchase of homes, leading to a resurgence in the real estate market. In fact, pending sales in U.S. metro areas, which were down more than 30% in April 2020, soared nearly 30% by August 2020, according to the National Association of Realtors.
The Influence of the Internet and Government Initiatives
The internet has played a significant role in shaping the real estate market. With the rise of online real estate services, consumers have become more aware and engaged. Key players in the market are leveraging technology to gain a competitive edge. For instance, Alibaba reported that over 5,000 real estate agents in China have adopted live-streaming rooms, allowing homebuyers to explore properties and make deals from the comfort of their homes.
Furthermore, governments around the world are taking initiatives to support the growth of the real estate market. For example, the Government of India, in collaboration with the governments of several states, has launched the Smart City Project, which aims to develop 100 smart cities. Additionally, the Reserve Bank of India has announced that the benchmark interest rate will remain at 4%, providing a substantial boost to the country's real estate sector.
Regional Opportunities and Market Players
Asia Pacific emerged as the leading region in the global real estate market, accounting for a share of 52.6% in 2021. The rising homeownership rates in countries like China, India, Philippines, Indonesia, Thailand, and Vietnam have contributed significantly to the growth of the market in this region.
The Middle East & Africa region is also experiencing rapid growth in the real estate sector. Residential and commercial projects are on the rise, with countries like Bahrain witnessing significant developments. For instance, Durrat Marina recently signed an agreement with Tamcoon for the development of 18 residential villas.
Global real estate market share, by type, 2021 (%)
In the competitive landscape, the real estate market is characterized by a mix of established players and new entrants. Many big players are diversifying their offerings to maintain their market share. For instance, Coldwell Banker launched the "Franchise and Capitalize" program to support the development of the real estate sector in Egypt, and Simon Property Group launched a brand campaign named "more choices" to attract consumers.
Some prominent players in the global real estate market include:
- Brookfield Asset Management Inc.
- ATC IP LLC.
- Prologis, Inc.
- SIMON PROPERTY GROUP, L.P.
- Coldwell Banker
- RE/MAX, LLC.
- Keller Williams Realty, Inc.
- CBRE Group, Inc.
- Sotheby’s International Realty Affiliates LLC.
- Colliers
Conclusion
The real estate market is poised for continued growth and success in the coming years. The increasing desire for personal living spaces, coupled with government initiatives and technological advancements, will drive the market forward. As the market continues to evolve, established players and new entrants alike need to adapt to changing consumer preferences and leverage innovative strategies to maintain their market share.
