There is no doubt that the 2008 mortgage crisis in the US prompted one of the worst economic downturns the world has ever seen although there have been signs of recovery in the worldwide real estate market over the last 12 months or so. We have seen London going from strength to strength, we have seen signs of recovery in Cyprus, Spain seems to be getting a second wind and Latin America continues to go from strength to strength. So, what is underpinning this ongoing recovery in worldwide real estate prices and is it sustainable?
If we take a step back and look at the situation from a distance, it is obvious that there has been a recovery in many economies, sentiment is finally starting to improve and there seem to be a number of particular groups of investors looking to the real estate market. So where are these investors materialising from and how long can this continue?
For many years China was something of a mystery to the business and investment arena, the government was very secretive, the population controlled and there was little in the way of business opportunities for Western investors. The situation has changed dramatically over the last few years, although there is still much work to be done, creating an array of very influential and extremely rich business people and business groups.
Quote from PropertyForum.com : “Is Spain about to become Europe’s most popular overseas property market?“
It is common knowledge that Chinese investors have been heavily involved in Spain, the UK, Cyprus, Greece, Portugal and an array of other real estate markets around the world. The Chinese government is looking to slow down the increasing cost of Chinese real estate which is forcing more and more people to look overseas for their future investment opportunities. When you also take into account the fact that many countries are crying out for a more sustainable and more secure real estate market, Chinese investors seem to be the perfect ally?
In years gone by real estate investment by Russian business people and business groups was often looked upon with suspicion and intrigue. There were suggestions of money-laundering problems, many questions as to where the money came from and indeed in many ways this stopped Russian investors becoming involved in the worldwide real estate market for some time. However, over the last few years we have seen a significant improvement in international money-laundering regulations, investment funds are now more transparent and, as with Chinese investors, there are many countries crying out for external investment to support their real estate markets.
Political interference within Russia has also encouraged investors to look overseas with the likes of Spain and Portugal offering exceptionally attractive residency visas for those looking to invest not only in business but also the real estate market.
At this moment in time Russian and Chinese investors seem to be awash with cash, more than willing to look overseas for their real estate investments and in many ways attracted by residency opportunities. Perhaps the main hope for international investment markets is that Russian and Chinese real estate investors can continue to take up the slack left after the worldwide downturn – while more “traditional” investors are able to build up their investment funds again.
There is every chance that Chinese and Russian investors could support an array of real estate markets in the short to medium term and indeed there are hopes that these particular groups of investors will be a major part of the worldwide real estate market for many years to come. It will be interesting to see the future make-up of local and international real estate markets and whether indeed this ongoing influx of money from China and Russia will continue.