The Factors Driving Global Property Markets

A recent report published by the Capital Markets team at Cushman and Wakefield has identified some of the main factors driving the global demand for property worldwide.  The report was based on research from some of the largest and fastest growing cities, including New York, London, Tokyo and Los Angeles, and it examined the general reasons why the market in investment properties in these locations was experiencing high levels of growth and demand.  In this article we’re going to look at two of the interesting drivers of property markets globally.

Demographics And Population

Overall, increasing migration and higher populations was fuelling demand for property in what the report described as “mature” and “up and coming” cities.  They also detected a distinct change coming from the affect of Generation Y on cities in terms of their ability to shape the types of property they would live in as well as a city’s lifestyle, working environment and even culture.  This generation – people born between 1978 and 2003 – were more likely to shun houses located in the outer suburbs to live close to the inner city in apartments or townhouses.  They are tech-savvy and interested in smart buildings with all the mod cons.  This shift in power towards the Generation Y demographic is, to some extent, reflected in the latest architect designed apartment developments and investment properties.

Brand

It is an interesting concept to think of a city as a “brand”, and the Cushman and Wakefield report suggests that property investors are looking more and more for locations that match a particular brand they have in mind.  This can consist of a number of different factors, including the kind of resources the city produces, its culture and entertainment facilities, the importance it places on education or simply whether the city is considered to be “cool” or “luxurious”.  As examples, Los Angeles tops the list for investors as a city with a definite and desirable “brand”, followed by new York, Paris and London.  Other cities in the list include Sydney, Rio, Seoul, Singapore, Madrid and Dubai.

A city with a brand and an image will attract increasing numbers of retailers, global “big name” companies, tourism, entertainment facilities and events and hotels.  This in turn attracts greater numbers of people wishing to live, work and play within the city.  Sensing an opportunity too good to miss, investors will soon follow thereby spurring greater demand for brand new investment properties and off the plan developments.

While the cities in the report are very different, each is being shaped by similar forces in terms of demand for property. For anyone interested in investment properties, these factors are important to recognise and study, as they are likely to indicate the next “hot spots” for investment.  Reports such as the Cushman and Wakefield study provide an invaluable overview of global movements and opportunities, but they can also be read in conjunction with more localised research to get an informed view of the property market.