Future Drivers

The real estate opportunities will be substantial in emerging economies due to increasing GDP and rising per capita incomes and global population growth. By 2021, investable real estate will grow 55% compared to 2013. We will see the greatest urbanization growth in history over the next few decades mainly in emerging markets driving the biggest ever construction boom.

Technology innovation in sustainability will disrupt real estate economics, making some types of real estate obsolete. Everything will have "sustainability standards" and all new developments will be have ratings. Collaboration with governments in emerging countries will take the lead with Public Private Partnerships (PPP) developing urban real estate and infrastructure.

Demand for prime locations will only intensify, considering new wealth creation from the emerging economies. Strategically located assets located near sustainable natural resources will become the most prized of assets. Making risk assessments will be vital to long term sustainable profits.


Financial Risks

1. Loan Default
2. Delayed Payment Suppliers Credit.
3. Repudiation of Contacts by Governments.
4. Loses from Exchange Controls.
5. Expropriation of Private Investments.
6. Inflation
7. Debt Service.
8. Liquidity.
9. Foreign Trade Collection Service.
10. Current Account Balance
11. Demographic Migration.
12. Natural Resource Depletion.

Political Risk

1. Economic Expectations Versus Reality.
2. Economic Planning Failures.
3. Political Leadership.
4. External Conflict.
5. Government Corruption.

By 2051, the urban population will increase by 75% to 6.3 billion, from 3.6 billion in 2011.

By 2026, there will be 37 megacities, up from 23 today, and 12 will be in emerging markets.

Global construction spending output is expected to almost double to $15 trillion by 2025, up from $8.7trillion in 2012.

By 2051 the world population will be 9.3 billion, up more than 50% from 6.1 billion in 2000.

By 2020, emerging markets will dominate the world's top five economies.

By 2031 we will need:

50% more energy
40% more water
35% more food

By 2050, there could be over 200 million environmental refugees worldwide.

The global stock of institutional-grade real estate will expand by more than 55% from 2012-2020.

Asset management assets to rise almost 60% to $101.7 trillion by 2020.

Local knowledge is essential for success in real estate and the skills needed are the following:

Skills

1. Sub-sector Specializations.
2. Urban Economic Analysis.
3. Deal Structuring.
4. Asset Value Management.
5. Product Development.
6. Risk and Reporting.
7. Regulation and Tax.
8. Cost Management.

Think Globally, Understand the Economics of the Cities, Factor Technology and Sustainability into Asset Valuations and Collaborate with governments to Enable Economic and Social Progress.

Joshua D. Mosshart