With a total value of $379.7 trillion at the end of 2022, real estate is worth more than the global equity and bond markets combined and is almost four times the size of global GDP, shows a Savills report.
At the end of last year, around three-quarters of the value of real estate was tied up in residential property, worth $287.6 trillion. Commercial property accounted for around 13%, while agricultural land had a share of 11%.
The value of the property industry slightly fell by 2.8% in 2022 compared to 2021, but over the past three years it has risen by 18.7%.
“Although real estate values slipped in 2022, bond and equity markets also struggled. Debt securities shrank by 3.2%, with equities suffering a 20.3% year-on-year fall,” according to the report.
Savills’ experts point out that real estate valuations held up in the first part of 2022 before higher interest rates and growing economic uncertainty dampened both residential and commercial markets worldwide. This has continued to happen this year as well.
Residential real estate fell by 1.6% in 2022, but on a three-year basis, between 2019 and 2022, its growth – at 21.1%. Commercial real estate fell by 1.8% in 2022, muted by weakening conditions in the second half of the year, but was up 14.4% over the three-year period. Agricultural land was down 11.4% year-on-year in 2022, but up 8.8% on a three-year basis.
The report shows that China retains its position as the world’s most valuable real estate market, accounting for a quarter (26%) of global real estate value. The US takes second slot overall, accounting for 19% of the global real estate market. The G7 countries plus China make up more than two thirds of total global real estate value.
“Significant real estate wealth is concentrated in Europe and North America. The value of property in these two regions accounts for almost half (47%) of the total value worldwide, despite them being home to just 17% of the global population. Asia-Pacific (excluding China), by contrast, has 37% of the world’s population but accounts for only 17% of global real estate value,” according to Savills’ data.
One conclusion of the analysis is that the relatively low value of property in populous nations with fast-growing economies signposts the huge potential these markets have for property value gains.
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