The last quarter of the 20th century was marked by a surge in the price of property in all countries, with few exceptions. But since the mid-2000s, the trend is back to normal and we even noticed the collapse of housing prices in some regions of the world.
Where is the real estate market today? In Ireland and Spain, the housing bubble burst. But while property prices continue to rise in the Celtic countries (+ 10.5% between Q2 2013 and Q2 2014), it continues to plummet in the iberian peninsula (-3.1% on a year and -31.7% since Q1 2008).
United States and Americas
In the United States and the Americas, the fundamentals of the real estate office market remain strong. Glimmers of hope in the North American market, US cities are in the process of economic growth, including the cities that are not dependent on the strength of technology and energy sectors. In the US, the fall of the price index began in 2007 was staggering, but the market returns to form since mid-2012 (+ 10.4%). At the same time, the median price of existing homes also increased in the land of Uncle Sam (+ 17.2%), fueling the talk about the emergence of a new bubble.
The evolution of the workforce is key indicator of the recovery in the real estate market in the USA.
The real estate market is also undergoing Canadian recovery phase. Strong demand in Toronto marks the beginning of a new era of growth: 473,000 new square meters will be delivered by 2017. Montreal will see the Deloitte Tower erected, and at the same time, Calgary and Vancouver will also see the arrival of new offers. The consolidation and intensification remain the norm on most Canadian markets, while the race for quality creates a vacancy on second-hand deals.
Mexico is the rising star of the real estate market of Latin American offices, particularly because of the energy sector reforms and secondary legislation passed by Congress, opening the country to more foreign investment. While GDP growth remained below forecasts in 2014, the next few years should see solid growth. South American markets are lagging behind, particularly in Argentina and Brazil, where levels of production and consumption remain weak.
Japan and India are the countries where economic growth is strongest. In Tokyo, the demand is fueled by companies that enjoy strong profitability, while in India, it is the IT sector who drive the market. Singapore, as a future destination for multinationals, with the Philippines and after India also takes advantage of technological growth.
Mature markets such as Tokyo and Singapore will experience an increase in the highest rents and many emerging countries will experience above-average growth. In much of China, rents will rise moderately to remain stable.
The modest growth observed in Asia Pacific has resulted in a sluggish rental market in 2014, but activity is poised to restart next year. Most markets will rejoice relatively low vacancy rate in 2015 and 2016, with the exception of some Australian cities and some emerging markets in China and India.
If the economic situation remains fragile, improvement emerges. The prospects are much better than they have been for a long time. Overall, the performance of the real estate office market is positive regarding rent increases, the level of supply and demand.
Of the 21 cities studied, 17 should see their rents increase. Dublin, with only one project in development, is expected to annual consolidated growth of 5.7% in 2014/2016. In London, developing projects will be limited over the next two years, due to lower average achievements and premarket absorbing future supply.
The office markets premium city center in Europe will reach respectable levels of growth until 2016. However, older programs will pay the price of large movements of densification and quality race.
In France, the price is rock stable between the 1st and the 2nd quarter of 2014. On a year it was down 1.2%, nothing to do, then, with the collapse predicted by some analysts. Standard & Poors, which released its forecast in late July 2014, even anticipates an increase in French real estate prices in 2015 (+ 1%) and 2016 (+ 2%). The resistance of the tricolor market, the rating agency attributed to historically low interest rates. The rating agency, however, that if the rates increase faster because of an external shock, which is unlikely but not impossible, the market reaction would be quick.
Here are the predictions for 2015