According to a recent JLL survey, the world's aging population would push global real estate transaction volumes to $1 trillion by 2020, up from $700 billion in 2015. Institutions are also expected to increase their market share, which currently stands at 20%, as a result of the need to meet the investment needs of the world's aging population. lusail marina
Global Cross-Border Trends to Watch:
In the next five years, cross-border trade is expected to account for more than half of all transactional activity.
Investors are likely to switch to alternative real estate markets, mergers and acquisitions, and joint ventures as a result of a shortage of new investment-grade availability.
The global aging population is fueling a surge in cross-border property investment.
International investors are expected to be the biggest drivers of this trend, with cross-border investment expected to account for more than half of all investment activity by 2020, amounting to more than $500 billion annually, with capital moving between regions accounting for the majority of this growth.
JLL's global capital markets research chief, David Green-Morgan, tells World Property Journal, "By 2050, there would be more people over 55 than the entire world's population in 1950. The amount of private equity capital targeting direct real estate is expected to increase by over 500 percent as a result of this demographic effect on real estate investment strategies. Increased institutional allocations searching for higher yielding opportunities would drive all of this."
Over the last ten years, real estate investment markets have seen many new developments as the sector has become truly global, aided by the asset class' steady income stream and the appeal of diversified portfolios, lower risk, and an inflation hedge.
Healthcare, aged care, student accommodation, residential construction, public and private real estate debt, and the establishment of a multifamily market outside of the United States have all been added to the definition of mainstream real estate investment.
"We expect that, in the absence of substantial new stock becoming available, capital will seek direct real estate exposure across a variety of channels, including joint ventures, alliances, M&A, and other alternative sectors including healthcare, retirement living, and, increasingly, residential," Green-Morgan added.
In an investment environment marked by low yields and unpredictable returns, the alternative real estate market has emerged as a bright spot of activity and potential. Allocations have increased exponentially, with the UK alone having a record-breaking £15 billion in sales in 2015, accounting for about 25% of all commercial real estate investment, up from less than 10% five years earlier.