Global Market Trends

Quarterly Vantage Point - Q4 2020

Read up on past Weekly Vantage Points to find out the hottest news during the period of Q4 2020.

RealVantage

2 Jan 2021 • 30 min read

Read up on past Weekly Vantage Points to find out the hottest news during the period.

October 2020

Private Investors Driving Global Investments

Investments by private capital have tripled in the last decade, with assets held by over 10,000 single family office crossing the US$5 trillion mark this year. While widespread COVID-19 lockdowns and travel restrictions around the world have stalled many investors’ short-term capital deployment plans, private investors have been particularly active throughout the year, with many entering the market for the first time.

Read also: Implications of COVID-19 Aftermath on Real Estate Sectors

Attracted by record-low financing rates and lower competition from bigger players, high-net-worth and family office capital increasingly play more active roles in real estate investment opportunities. Furthermore, individual investors wary of risks are increasingly turning to direct investments in real estate, focusing on the IT and Healthcare sectors.

Ramp Up in Real Estate Strategies Amid COVID-19 Uncertainty

JLL – COVID-19 has prompted private investors to look at assets that they may not have previously been able to secure due to the larger volumes and the competitiveness of capital. Private capital turns to the stability that real estate offers – either direct investments or co-investments – compared to other more volatile asset classes because of reduced fees and more control over investments.

Global House Prices and Rental Yields Defy Pandemic

The Urban Developer – Despite the sharpest economic downturn in 60 years, house prices in major markets remain relatively stable or on the way up. Similarly, many predicted a fall in rental yield. While this may be true for heavily COVID-19 impacted capital cities and suburbs, rental yields have overall remained resilient.

Family Offices and Wealthy Investors Wary of Investment Risk

ThinkAdvisor – Three in four family principals and office heads in a new survey indicated a mostly cautious investment outlook for the coming 12 months, Citi Private Bank reported last week. The survey found that the majority of family offices had boosted allocations to direct investments in the coming year within IT, healthcare and real estate sectors.

The World's Richest Families Turn to Private Equity and Real Estate

Global Finance – Since the 2008 crisis, wealth managers for ultra-rich families have learned to navigate market turbulence to preserve multi-generational fortunes. As uncertainty somewhat still remains for post-COVID period, the shift toward real assets is likely to continue.

UK House Prices Rise at Fastest Rate Since 2016

The Guardian – House prices rose in September at the fastest annual rate since the aftermath of the Brexit vote in 2016, as buyers continued to take advantage of a benign market despite the coronavirus pandemic. The pandemic has shaken up the housing market, with the return of demand after the UK-wide lockdown and temporary cuts to stamp duty helping to sustain home sales.

US Housing Market in Focus

With rent in large cities increasing, many millennials have turned to homeownership in the suburbs. At the same time, many younger millennials are also moving into the cities to join the workforce.

Over in Australia, the government's latest budget is committed to mitigate the impact of COVID-19 disruption in the economy and bolster the real estate market. The allocation of infrastructure spending is also the biggest since 2008 which is expected to boost both residential and commercial real estate by 2040.

Housing and the Future of Real Estate Demand

JLL – Amidst all the trouble the economy is experiencing, one bright spot continues to stand out: the housing market. This contrasts significantly with the previous recession when housing not only struggled, but also directly contributed to the downturn in the economy.

U.S. Housing Market Zooms into October

Mansion Global – The slight increase in total listings comes as the average asking price remained “stubbornly high” in the week ending October 3, close to the peak of $350,000 recorded during the summer, according to the report from realtor.com. Home prices were 12.9% higher than a year ago, marking the highest annual growth the listing website has recorded since 2017.

Construction in UK Shows Surprise Acceleration in September

The Business Times – Britain's construction industry unexpectedly picked up speed in September, helped by a post-lockdown bounce in the housing market, a survey showed on Tuesday. The IHS Markit/CIPS UK Construction Purchasing Managers' Index (PMI) accelerated to 56.8 from 54.6 in August - above all forecasts in a Reuters poll of economists, which had pointed to a slight slowing.

Budget Set to Provide Boost for Real Estate Sector

JLL – The Australian government’s latest budget is committing support and investment incentives to mitigate the economic impact of COVID-19 in moves that are likely to bolster the real estate sector. The announcement promised additional infrastructure investment and the expansion of a scheme that allows first-time home buyers to enter the market with a deposit as low as 5 percent.

Australia to Expand First-Home Buyer Assistance to Lift Economy

The Business Times – Australia will provide 10,000 extra places in a programme to help first-home buyers and encourage construction as the economy recovers from the impact of the COVID-19 pandemic.

Dramatic Shifts in Real Estate

Trends that have been at play for years in the making are seen to be exacerbated in recent months, driven by the new norm of a world living due to COVID-19. Whether in residential real estate or in the office sector, we see that investors and developers alike are exploring new options in real estate investment, including a shift away from big cities.

Read also: Implications of COVID-19 Aftermath on Real Estate Sectors

The economy as a whole seems to be picking up, with experts expecting a rebound in the third quarter after the first recession in over a decade. With loose monetary policies supporting economies and mortgage rates at records lows, we see money supply growing and higher home sales prices in the market, although it still stands that fiscal policy support remains vital to support economic growth.

Pandemic Trends Brewing for Years in Residential Real Estate

Mansion Global – In depth review of current trends in the global residential markets reveals how shifts have been underway long before anyone has heard the term "social distancing". Head of US Real Estate at UBS's Chief Investment Office, Jonathan Woloshin, shares how residents and some business owners have been leaving high-priced, heavily-taxed states (from New York to California) for secondary markets as early as in 2010.

Stephen Moroukian, head of product and proposition for Barclays Private Bank also highlights the same trends in the UK, with the outbreak accelerating although not considered to be the initial drive for the shift from London into the country.

Good Deals vs Good Locations

Forbes – The location for residential property that people are paying may no longer be worth the price in big cities in the states. Within NYC, trendy neighbourhoods that had been on buyers' wish lists go down that list with nightlife closed and work or school commutes no longer a factor for the coming months. This has paved the path for higher square footage and better amenities in towns that would not have been an option pre-COVID.

However, the stability that big cities offer may make this shift a temporary phase, with continued sales in cities like London throughout the pandemic signalling that this bubble of 'location-irrelevant' buying may eventually burst. While the crave for proximity may kick in as more businesses, offices, and schools reopen, for now, those willing to make a move, whether to a new neighbourhood, city, or state, are getting some very good deals.

Global Economy Heading for a Rebound

JLL – Since the Global Financial Crisis 11 years ago, the global economy has not seen a decline like the one we have had this second quarter, with quarter-over-quarter real GDP decline at about 7%. This decline, driven by reduced consumption resulting from forced closures of businesses by government edict and operations restricted to a limited capacity coupled with consumers avoiding activity for fear of falling ill, is beginning to reverse.

However, both hard and soft data indicate that the economy is stabilising, with data released thus far strongly signalling a rebound at a robust pace as the economy snaps back. Growth during the quarter is expected to reach 7%, leaving the global GDP at about 4% below 2019 levels. With loose monetary policy remaining supportive, government spending will remain critical for plugging the hole left by the private sector in several important economies.

Mortgage Interest Rates Hit Record Low for the 10th time this Year

Freddie Mac – The steady decline of mortgage interest rates in the US has seen another fall this week, with rates dropping to 2.81% and 2.35% for 30-year and 15-year fixed-rate mortgages respectively, according to the Freddy Mac weekly mortgage survey.

Strong demand in mortgage applications amidst increased purchases are reflected in house price hikes around the country, with increases of 6-7% across homes at every price tier, save for the very low end of the spectrum where house prices only increased by 2.9%.

Rally on the Housing Market

Economic data for the third quarter of 2020 has been promising and filled with many pleasant surprises on a recovery. However, many analysts believe that the recovery may be short-lived as the world is entering another flu season come fall and winter, amidst the COVID-19 pandemic.

Although the near future seems pretty uncertain at this time, the outlook of the housing market provides some comfort as the residential and data centre sectors continue to defy uncertainties. The pandemic has also changed homebuyers' requirements as they now seek bigger homes and social distance from others.

A "Boys of Summer" Economy?

JLL – Data released last week had a “Boys of Summer” feel to it, as if something has already ended and maybe we just have not fully appreciated it yet. As summer wrapped up in September, retail spending surprised on the upside. Consumers splurged on new cars, clothing, sporting goods and dining out, potentially taking advantage of outdoor activities while the weather remained cooperative across much of the country.

US Existing Home Sales Blow Past Expectations in September

The Business Times – US home sales surged to a more than 14-1/2-year high in September, boosted by historically low mortgage rates, but record high prices amid a shortage of houses could curb further gains. The National Association of Realtors said on Thursday that existing home sales jumped 9.4 per cent to a seasonally adjusted annual rate of 6.54 million units last month, the highest level since May 2006. Data for August was revised down to a rate of 5.98 million units from the previously reported 6 million units.

Construction after COVID-19: The New Normal for Real Estate Development

PropertyWire – In just a few short weeks, COVID-19 changed everything. No industry has been left untouched, and it’s pretty safe to say that most industries may never look the same again, at least for the foreseeable future.

Few industries have felt the impacts of the global pandemic more than real estate, construction and development. This really shouldn’t come as much of a surprise though. Real estate development has always been at the whim of what buyers want — a behaviour that we know is ever-changing. It is a developer’s job to anticipate these changes, but COVID-19 has veered everything a little off course, causing real estate developers to make a course correction.

Real Estate for Data Centers is Having a Moment

TheRealDeal – Real estate for data centers is booming as the popularity of streaming services like TikTok drives demand. Digital Realty Trust, a $41 billion real estate company and one of the largest data-center developers in the USA, will develop a 600,000-square-foot compound after receiving a major commitment from Bloomberg LP, the parent of Bloomberg News, Business Insider reported.

November 2020

Signs of Recovery - Real Estate Turns Optimistic

Fuelled by digital innovation, PropTech and FinTech solutions are bolstering an already hot residential market. Developers and mortgage lenders are winning big as homeowners seek out larger property to work from home.

Read also: An Analysis of COVID-19’s Impact on Office Real Estate Demand

At month close, Q3 stats indicate overall positivity and optimism for real estate. The market is finding comfort as homeowners prioritise payments despite the ending of government assistance. Investors are settling into the new normal and capitalising on the growth of consistently performing market trends.

PropTech Poised to Transform Property

Property Week – The pandemic is shifting the real estate market toward disruptive tech solutions. Highlighted by Opendoor's recent valuation at 4.8 billion, tech innovations are bringing an old-school industry into the digital realm. Solutions such as 3D virtual viewings from Peek are ushering in a new era of digitalisation.

Multifamily Residents Prioritise Rent Payments Despite Pandemic

Freddie Mac – A new analysis from Freddie Mac (OTCQB: FMCC) shows that overall rental payment performance has remained resilient in the face of the economic downturn due to COVID-19. Rent payments for 2020 were between 94%-96%, tracking slightly lower from 2019 by merely 2.2%. Supported by unemployment insurance, stimulus, and enhanced unemployment benefits from the CARES Act, households still manage to find a way to make rental payments as their main priority.

ASX Real Estate Winners and Losers

Stockhead – Over the last 6 months, the majority of Australia Stock Exchange (ASX) real estate stocks have recovered. Property developers win big, with Ultima United's (ASX:UUL) 6-month surge from 2 cents to 57 cents and Faster Enterprises' (ASX:FE8) 717% growth in the same period. On the downside, office spaces continue to take hard hits. Victory Offices (ASX:VOL) is down 90% in 12 months and ServCorp (ASX:SRV) is down 46% year-on-year.

UK's Largest Mortgage Lender Cashes in on Boom in Home Loans

The Guardian – Lloyds Banking Group's reports that mortgage lending increased by £3.5bn in Q3 and claimed the highest number of applications processed since 2008. A temporary stamp duty holiday, a race for space, and homeowners rethinking their living spaces have driven buyers toward larger homes away from the city centres.

Cautious Optimism in Singapore Real Estate as Sentiment Improves

NUS – According to the Current Sentiment Index, an improvement from 3.1 in Q2 to 5.3 in Q3 indicates a broad optimism for the property sector. While the industrial/logistics and suburban residential sector remain the strongest performers, senior executives of real estate firms predict that business park/hi-tech space and suburban retail will be the first to recover.

Real Estate Investment Q4: A New Hope

Real Estate Investment looks up to a new dawn after a long tiring night of Coronavirus gloom starts to fade away, with potential new hopes and opportunities brought by signs of improvement in the real estate sector across various countries. Asia Pacific property investment is leading the way with signs of recovery in the commercial real estate in China underpinned by changing consumption patterns and the new era of flexible workspaces, sustainability, and technological innovation.

Bright spots are also seen especially in Seoul, Tokyo and Singapore where a surge of investment activity rises as these cities are tabbed by analysts as top three cities globally for investment. In terms of real estate's sectors, the changing shopping behaviour in the US has created great opportunities for warehouses, distribution centres and remote working spaces.

We also see efforts made by the Hong Kong’s Mortgage Corporation's action to lower their interest rate and extend the pilot fixed-rate mortgage scheme for homebuyers so as to enhance the banking stability in the long run as the city currently faces rising unemployment and a recession.

Elsewhere, European real estate financiers remain worried that economic downturn caused by the pandemic situation will catch up with the soaring property valuations that have kept on rising in developed countries, as European banks start to rein in their mortgage funding.

Here are Real Estate's Winners and Losers in the New Normal

Entrepreneur – Residential housing has stayed resilient throughout 2020. Commercial Real Estate (CRE), however, is severely impacted as lockdowns forced offices and shops to close.

But there’s a silver lining to Americans changing their shopping behaviour: online sales and work-from-home (WFH) are creating lucrative opportunities for cold-storage warehouses, distribution centres and remote working spaces.

Despite these trends, the residential housing market remains robust due to low mortgage rates and a glut of supply. COVID-19’s impact on real estate is interesting because there are underlying structural transformations on how Americans study, work and buy food. Investors, developers and tenants will need to adapt to a permanently different landscape.

Commercial Real Estate Investment Market Set to Boom in China

Shine – Investment in China’s alternative sectors is set to boom over the next decade, underpinned by changing consumption patterns and new technology adoption. By 2030, the total value of investable commercial real estate in China will increase to about 80 trillion yuan (USD$ 12 trillion), the largest in Asia Pacific in a decade.

The new era of China's commercial real estate development will be characterised by sustainability, technological innovation and flexible workplaces, the emergence of new tier-one cities as well as alternative asset classes with greater integration of real estate and finance; thereby creating significant new opportunities for investors.

Hong Kong Extends Pilot Fixed-Rate Mortgages Scheme by a Year, Lowers Interest Rates to Combat Pandemic Fallout

SCMP – Hong Kong Mortgage Corporation (HKMC) extended the pilot scheme by a year, and said interest rates will also be lowered further from between 2.75% and 2.55% to a lower rate of 1.99%, as the city faces rising unemployment and a recession amid this coronavirus pandemic.

HKMC aims to provide an alternative financing option to homebuyers for mitigating their risks arising from interest rate volatility, to enhance banking stability in the long run. The application period for Fixed-rate Mortgage Pilot Scheme opens on Monday, and has been extended until October 30, 2021.

APAC Property Investment Spikes 35% as Institutions Step Up

Mingtiandi – Real estate investment in Asia Pacific showed signs of recovery in the third quarter of 2020 as volume shot up 35 percent from the previous three months, supported by the return of institutional investors who had stayed on the sidelines during the first half of the year.

Seoul and Tokyo are tabbed by analysts as the top two cities globally for investment to date, with Singapore following in third place as the city stands out to be a safe haven for corporate activity. While uncertainty will remain for the foreseeable future, we believe that low transactional activity has bottomed out, the optimism for the fourth quarter and beyond continues to grow.

Surge in European House Prices Stokes Concerns Over Market Resilience

Financial Times – The housing market acts as the canary in a coal mine, as prices tend to drop as a wider economic downturn looms. But this year, with a deep global recession caused by the coronavirus pandemic situation, property valuations have kept on rising in developed countries worldwide.

Real estate financiers worry that the fallout from the pandemic will catch up with the soaring valuations, added with a worrying sign where bank in Europe’s housing market starts to rein in their mortgage funding.

Cautious Optimism in Real Estate

Despite another wave of COVID-19 cases in some cities, the real estate market has proven its resilience throughout the year thus far. The paradigm shift caused by the pandemic in 2020 has driven investors to re-evaluate their core allocations and opportunities. Increasingly, there are many alternative non-bank lenders taking the action to finance deals as traditional banks take a step back amidst ongoing economic uncertainty.

Read also: Understanding the SIBOR (Singapore Interbank Offered Rate)

As global interest rates remain low and volatility remains high in the capital markets, investors continue to hunt for yield and stability. Global real estate has seen liquidity beginning to recover, although the impact on the property market due to COVID-19 could be temporary or more structural, which remains to be seen. Mixed developments in the commercial real estate sector as office demands remain subdued since many are still working from home.

However, logistics warehouse, data centres are seeing robust activities as e-commerce continues to drive demand. The residential sector extends its rally with increasing transaction volumes and producing stable cash flows to investors.

Global Real Estate Perspective - November 2020

JLL – The global economy rebounded in Q3 but a resurgence of COVID-19 cases in parts of the world highlight the ongoing uncertainty of the outlook. Reflecting this, decision-making processes remain protracted as companies continue to be cautious and review long-term strategies.

Why Alternative Lenders Expand into Real Estate Markets

JLL – Non-bank lenders are increasing activity in real estate markets globally to finance deals as traditional banks take a step back amidst ongoing economic uncertainty. Global investors have raised US$16.5 billion of debt capital so far this year, a figure already well on the way to exceed last year’s total of US$16.6 billion, PERE data shows. Among the most active groups are private equity, insurance and superannuation firms, and high-net-worth individuals.

COVID Pushes Real Estate into the Future

The Business Times – The coronavirus could be the crisis that finally propels the tech-averse real estate industry into the 21st century. Location matters less now that the office is now the kitchen. Size matters more now that everyone is at home. And the best way to justify exorbitant prices is no longer the building's amenity package; it's peace of mind walking from the lobby to the living room.

How will COVID-19 Impact Asian Real Estate?

The Business Times – COVID-19 will likely impact the property market. Some of it might be cyclical and therefore temporary, while others might be structural and permanent, such as the accelerated shift to online retailing.

Commercial Real Estate Investment Rises but Investors Remain Cautious

JLL – Direct commercial real estate investment hit US$149 billion in the third quarter, up from US$107.3 billion in the second quarter, according to JLL data. However, the third quarter figure is down 44 percent from the same period last year.

Heading into the Festive Season with a Positive Outlook

As the world heads toward the festive season and the end of 2020, optimism rises across the markets with hopes of a vaccine coming near. The global real estate markets have become relatively predictable with hot growth in residential sector.

New housing constructions in the US have reached the highest level since mid-2007, despite concerns of current management or resurgence of the virus in some major cities. Consumer confidence in Australia has also reached a strong positivity since lockdowns have ended.

Elsewhere, in the UK, the temporary stamp duty holiday has fuelled a mini-boom in the property market much more than originally anticipated. There is also a growing trend among real estate investors now, both institutional and individual, to seek out for alternative investments particularly on 'social real estate' assets that provide social benefits as part of their investment theses.

Australian Real Estate Showing Rapid Recovery over the Past Month

Realestate.com.au – As lockdowns have ended and COVID-19 cases have fallen drastically, Australian consumer confidence is elevating to strong positivity. Borrowing costs have fallen, which can only bode well heading into the festive season and the new year.

ANZ-Roy Morgan's weekly consumer confidence rose 3.4% to the highest level in over 8 months, while the Westpac-Melbourne Institute confidence index reached the highest point in seven years, and The Time to Buy a Dwelling index reached the highest point since November 2017.

US Housing Starts at Highest Levels since Mid-2007

The World Property Journal – Overall housing starts increased by 4.9% in October 2020 to a seasonally adjusted annual rate of 1.53 million units. Single-family starts or new constructions are up 8.6% YTD, the highest in 13 years, while the multifamily sector remains on pace and unchanged.

This historic rebound is supported by low-interest rates and home-buyer preference shifting to the suburbs and exurbs. This growth varies regionally, with combined multifamily and single-family starts at 15.5% higher in the Midwest, 7.5% higher in the South, 4.7% higher in the West, and 6.4% lower in the Northeast.

Property Funds World – New research reveals that 93% of European professional investors take social benefits and impacts or 'social real estate' into consideration, and 80% have this firmly on their radar as an investment opportunity. There is a growing trend among both institutional and retail investors to seek these social real estate assets that provide long leases to providers of services such as supported or assisted living, social housing, shared ownership, primary care and education.

Calls to Extend UK Stamp Duty Holiday Mount as Fears of Slump Grow

The Guardian – The temporary stamp duty holiday in the UK has fuelled a mini-boom in the property market, but it's set to finish end of March 2021. The end of the holiday may act like a cliff edge and see an immediate reversal in the 2020 housing market gains. Additionally, the furlough program and several financial support schemes are scheduled to end on this same day. Ministers may be forced to extend these benefits to prevent a massive housing market correction.

1 in 4 US Families Looking to Move Due to Local Government's Pandemic Response

The World Property Journal – A recent survey of Americans reveals that 26% of respondents wish to move away due to their local government's response to the pandemic. The rise in remote work has removed barriers to relocation and enabled a move without changing jobs. 53% of respondents are uncomfortable with the idea of moving to a big city, which is up from 39% pre-pandemic. People no longer wish to live in crowded dense places and continue to search for bigger homes in the suburbs.

December 2020

Finding Value in Real Estate Investment Amidst the Pandemic

The COVID-19 pandemic has affected everyone's life since the beginning of this year with many people all over the world being forced in a lock-down 24/7 inside their houses. This situation has made people to rethink their standard of living. A survey in England shows many city folks, especially London which accounts for 18% of potential buyers across the rest of England, have decided to move away from their flats and decided to invest in properties in the suburbs, where life is quieter, and houses there offer more space and lush, healthier surroundings.

Meanwhile in Australia, house prices near popular public schools surge by 35% as the boundary with public school catchment zones has a huge influence on property investment decisions for families with children.

In the US, real estate's institutional investors are increasing their commitments to 'impact investing', where they are looking to invest more in properties that provide the needs of working-class families and individuals with affordable and safe communities after their first-hand experience from all the cases of racism and violence across the country.

In addition, with the mortgage interest rates continuing to drop, there is now a deluge of mortgage applications compared to previous years. Despite the increase in price and limited supply of houses, with the purchase activity increasing, this could be a sign for a good year in the real estate industry!

Housing Market Stabilising During Second Lockdown

PropertyWire – The housing market in England and Wales is displaying signs of stabilising, according to analysis of web traffic from property advice website Property Price Advice. Requests in June were almost 70% above the four-year average, the highest ever recorded on the website. Given the level of activity, average house prices for November and December are expected to be 3.3% ahead of the same months in 2019.

Real Estate can be Your Solution in 2021

Entrepreneur – In a recent report published by PwC and Urban Land Institute, this pandemic will change how property is bought, sold and used. Perhaps one of the most interesting takeaways from the report is “Housing as a solution - for people, for communities, and for societal repair” - and the way real estate will emerge as one of the coming decade's forefront business opportunities.

Individuals and families are shifting into planning mode and thinking about their living space in terms of both personal and professional comfort, as well as safety. Institutional investors are increasing commitments to ‘impact investing,’ and real estate investments that address racial inequality are a key target.

Londoners are Ditching City Life for Greener Pastures

Mansion Global – An increased share of London residents are now registered to buy outside of the city, with Londoners now accounting for 18% of potential buyers across the rest of England, excluding London itself, according to data from estate agency Hamptons International.

Demand for new homes across the UK has soared, driven by a combination of the increased adoption of remote working and desire for more space that has emerged amid the coronavirus pandemic, along with a rush to beat that approaching stamp duty holiday deadline and secure the opportunity to save up to almost £15,000. Buyers are increasingly seeking peace and quiet, with the most coveted spots being eyed by movers earlier this fall were rural areas with small populations.

House Prices Near Popular Public Schools Surge by 35% Even During Recession

Daily Mail – Online property sales site Domain has revealed Australia's hottest suburbs for price growth in the year to October with buyers particularly keen on homes near both primary and high schools, as high schools took out six of the top ten spots for the most impressive growth in property values.

The boundary of public school catchment zones can have a huge influence on property decisions and data suggests being in the right school catchment area makes a real different to prices, regardless of whether the house was near the city or in the outer suburbs.

Another Record Low Mortgage Rate Just Caused Demand to Jump for Both Refinances and Home Purchase

CNBC – Mortgage interest rates have set record lows more than a dozen times this year, and last week there was yet another. That caused mortgage application volume to increase 3.9% compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Mortgage applications to purchase a home rose 4% for the week and were 19% higher than the same week one year ago.

Amidst strong competition for a limited supply of homes for sale, as well as rapidly increasing home prices, purchase applications increased for both conventional and government borrowers. Furthermore, purchase activity has surpassed year-ago levels for over six months.

A Promising Start to 2021 for Real Estate

2020 has been a turbulent year for the whole world and every industry has been affected in one way or another. Ironically the global markets have recovered as quickly as the pandemic hit and these include the real estate market which has surprisingly performed better than expected with the winners in residential and industrial sectors.

Read also: Guide to Investments in Singapore

Prices of residential homes has been driven up consistently by record-low interest rates, tight supply and a great demand from home buyers in the US and Australia. This mismatch between homebuyer demand and housing inventory would support further increase in house prices as well as boost consumer wealth, which will be a welcome boost to consumer spending power. Increasingly, savvy real estate investors are now diversifying their portfolios with multifamily asset type, a sign towards defensive strategies.

US Mortgage Rates Fall to a Record-low

The Business Times – US mortgage rates fell to a record low for the fourteenth time this year. The average for a 30-year, fixed loan dropped this week to 2.71 per cent, the lowest in data going back to 1971, Freddie Mac said in a statement on Thursday. The previous record, 2.72 per cent, held for two weeks.

Australia's Housing Market Roars Back, Boosting Wealth and Construction

The Business Times – Australia's housing market has come roaring back to life as record-low interest rates stoke demand from first-time buyers, lifting approvals for new homes to 20-year highs and delivering a major windfall to consumer wealth. This will be a welcome boost to consumer spending power given Australia's housing stock is estimated to be worth a heady A$7.2 trillion (S$7.1 trillion).

Even With Low Inventory, Expect a Strong 2021 Housing Market

HousingWire – Even prior to the pandemic, housing inventory had hit record lows, and the problem has only gotten worse as demand continues to rise. Total home sales are outpacing new listings by a wide margin every month, and real estate tech company Homesnap foresees the shortage continuing in 2021, creating a mismatch between homebuyer demand and housing inventory which would support further increase in house prices.

Why Real Estate Investors are Turning to Multifamily

JLL – Real estate investors are increasingly hunting for multifamily real estate, a sign of the broader pivot towards defensive strategies amid ongoing economic uncertainty. Investment in all real estate sectors fell 44 per cent in the third quarter of the year, compared to the same period in 2019, according to JLL.

However, multifamily has fared better than most other sectors, with investment falling, but by 27 per cent. Investors picked up US$116 billion of multifamily assets in the first nine months of this year.

Can Industrial Real Estate be the Cure to Your Property Investment Needs?

Forbes – Compared to other segments of the real estate industry, social distancing is a less disruptive factor to industrial operations and the industrial sector still has a strong income stream.

However, industrial real estate requires demand, and the consumer retail sector is the front end of that. Now that retail is jeopardised due to the pandemic, how can industrial continue to prosper? If those non-industrial sectors don't get proper attention soon, the industrial sector will start to stall.

All Eyes on Real Estate - It's Still Booming

This year has seen an unprecedented level of increase in property values across many markets including the US, the United Kingdom and Australia - and this trend is likely to continue well into 2021.

Investors remain confident in the real estate as a sought-after defensive asset with warehouses proving to be a hot commodity now as e-commerce drives up the need for further expansion. In Australia, waterfront and beachfront properties continue to command sky-high premiums as the ultra-wealthy forced in lockdowns down under compete to add exclusive trophy assets with beach views.

Meanwhile, US homeowners are gaining massive levels of home equity due to the continuing rise in house prices year-on-year. Europe remains hot for residential estate with the UK determined as the top destination for future 2021 investment, according to a global survey done by DLA Piper. Indeed, investor sentiment does not seem to wane across the stock market despite the pandemic, with Airbnb topping out as the largest US IPO of this year at over US$100bn in value.

Warehouses Lure More Cash than Offices in Pandemic-Fuelled Flip

The Business Times – For the first time, investors have significantly driven up the prices of warehouses, with the investment surge driving up prices by 8.5%. The massive switch to e-commerce shopping has made warehouse space more valuable than ever, and investors are confidently driving up prices. However, this could lead to overvaluation as a huge amount of industrial space is being built to keep up with the higher-than-ever demand.

Europe Remains Hot for Residential Real Estate, and the UK is at the Top

PropertyInvestorToday – The UK ranks the highest for future residential real estate investment. A survey of 500 real estate investors, developers and asset managers with $3bn AUM indicated multiple positive outlooks for European real estate. 55% of respondents feel positive, 34% neutral, and only 11% negative.

For positive responses, the top reasons are high demand due to a shortfall in supply, high real estate income yields compared to fixed income, and attractive asset prices. 74% intend to invest in EU residential assets in 2021, and 29% expect to invest more next year than in 2020.

The Cost of Buying Australia Waterfront and Beachfront Property Booming

Domain – Australian waterfront properties are worth 69% more than their non-ocean view counterparts, which represents a 6% increase since last year. Ultra wealthy and cash-rich investors are adding waterfront properties to their portfolio. In Sydney, beachfront properties are double at a 105% premium, a 10% increase since last year.

Perth is at a 61% premium (up 7.5%), Brisbane at 47% (up 2%), and Melbourne at 30% (up 3%). The Australian psyche keeps them close to the sea and this is reflected in these historically high prices.

US Homeowners Gained $1 Trillion of Equity in Q3

The World Property Journal – US Homeowners with mortgages (63% of all properties) saw equity increase by 10.8% year-on-year at an average gain of $17,000 per homeowner, representing the largest average equity gain since Q1 2014. Only 3% of all mortgaged properties have negative equity, a decrease of 6.9% from Q2 to Q3. Since Q3 2019, this number decreased by 18.3%.

The rise in home prices in Q3 varies from city to city, with Washington homeowners having gained an average of $35,800 in equity, while those in North Dakota only gained $5,400.

Airbnb IPO Surges Past US$100bn in Biggest US IPO of 2020

The Business Times – Capping the tech investment craze of 2020, Airbnb stock more than doubled in their Thursday stock market debut. This IPO is the culmination of their stunning recovery after heavily sustained the impact of COVID-19.

As the greatest comeback story of 2020, lockdowns eased and travellers sought out homes outside the city, opting to book homes rather than hotels. In a private fundraising at the start of the pandemic, Airbnb was valued at US$18bn. Their stock market debut has quadrupled their fully diluted value to US$100.7bn.

The Rise of Real Estate

Experts predict that the housing demand will outstrip supply in 2021 with low inventory and low-interest rates which will drive housing prices to reach near all-time highs. For sellers, this would mean relatively low time on market, and at or above asking price offers.

For the Australian market, Brisbane and Sydney are both showing resilient activities in rising home sales and new construction, taking advantage from the high interest from the local demands. Similarly across the field in Calgary, Canada, a rise in the single-family home sales shows that the market is poised for a recovery which will lead to price growth and higher rents in the future. Meanwhile, for the UK market, investment activity in real estate has shown a significant trend with a 200% to 300% year-on-year increase in enquiries from investors.

Read also: Investing in the UK Real Estate Market

Across the commercial sector, several corporate executives from all over the world have recently addressed the urgency to cut real-estate costs. Tactics include cutting office space, accelerating branch closures, renegotiating rents on warehouses and even shutting data centers.

Experts Predict What The Housing Market Will Be Like in 2021

Forbes – The housing market has been on fire this year with record-low mortgage rates and a sudden wave of relocations made possible by remote work. Some experts is hoping that 2021 will be the rise of real estate investing, thanks to the the society's better understanding regarding how important the value of their home is.

The year 2021 will see home builders responding to the market's movement with higher price due to the low supply, and limited inventory; which mean that buyers would potentially need to contend with affordability challenges especially with a forecast of increasing mortgage rates.

New Report Suggests Opportunity Knocks for Investors in Calgary's Housing Market

Calgary Herald – Calgary’s real estate market in Canada has been an unexpected hot-zone of sales activity despite the pandemic. The cosmopolitan Alberta city is unlike other parts of the country being further along in its slump.

This means the market may be poised for recovery, leading to price growth and higher rents. "In fact, the optimal time to buy and hold is at the end of a slump", said Jennifer Hunt, vice-president of research at the Real Estate Investment Network.

Sydney's Darling Point Records Highest Median Home Value for 2020 Amid Luxury Homes Market Recovery

ABC – Several of Sydney's eastern suburbs recorded the highest median housing values, according to CoreLogic data, which says Australia's $7.2 trillion residential real estate market has proved "remarkably resilient" despite the nation's largest economic downturn since the 1930's. Sydney's eastern suburbs are still showing the highest median values, starting with Darling Point ($7.06 million) followed by Bellevue Hill ($5.72 million), Vaucluse ($5.39 million) and Double Bay ($4.76 million).

The Housing Industry Association (HIA) New Home Sales report for November 2020 showed new home sales rose by 15.2 per cent over the month to set a new decade high and 41.1 per cent higher from the previous quarter compared to the same time last year.

The World's CFOs Have a Dire Message for Real-Estate Investors

Bloomberg – Property investors are about to discover just how much the global fallout from the coronavirus pandemic has spread from deserted and cast-off buildings to their bottom lines. Hundreds of corporate executives tracked in earnings calls around the world in the past five months addressed the urgency to cut real-estate costs.

Tactics include cutting office space, accelerating branch closures, renegotiating rents on warehouses and even shutting data centers. While the coronavirus vaccine has thrilled investors worldwide and sent real estate stocks rebounding, celebrations may turn out to be premature. The kind of changes that officials have been discussing have often been of a permanent and structural nature and will take some time to filter through to investors’ bottom lines.

There's 'A Lot of Opportunity' in Real Estate as Pandemic Pinches Property Market, says Investor

CNBC – Opportunity abounds for investors looking to seize on distressed real estate assets in the wake of the coronavirus pandemic, according to one of London’s prime real estate investors. The global property market has been hit hard this year by the twin ills of waning demand for commercial real estate, like offices and retail space, and shifting residential property demands, as homeowners switch cities for the suburbs.

Montague Real Estate’s Thomas Balashev said that "the current economic downturn had devalued otherwise sound assets. Investing opportunities are available across the globe," noting an uptick in interest from investors in Asia.

Vantage Point is a curated cache of the latest trends in real estate investing repurposed from media outlets and websites around the globe. Each article is a succinct wrap-up of key news points for an easy read. Outbound links, embedded in each editorial, are attributed to original external sources. RealVantage makes no warranties or representations regarding the accuracy, completeness or veracity of the information or data contained in such external sources. Editorials under the Vantage Point vertical do not reflect the views of RealVantage, in part, or in its entirety.

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