While there are many different factors to take into consideration when looking at the real estate market, worldwide population is one that is often overlooked. A report out today suggests that the worldwide population will increase by 3 billion people by the year 2100. The vast majority of the population increase will be in urban areas with an estimated 1 billion in Asia and 2 billion in Africa. So what does this mean for the future?
Economic growth
Any worldwide property market is dependent upon local economic growth and long-term forecasts suggest the developed Western world will grow by between 1% and 2% per annum through to 2100 with rest of the world forecast to grow by between 4% and 6% per annum. This will bring into play areas such as Africa and Asia which have not yet attracted the investment required to improve and build upon local infrastructure. Indeed there are also very basic health issues which need to be addressed sooner rather than later by governments and investors.
The fact is that as the populations of Asia and Africa continue to grow so international investment in these regions will also increase. Once this momentum builds it should turn into a self-fulfilling prophecy with greater economic growth, more demand for property and we could even see a significant shift in the movement of expats.
Demand for property
We’ve already seen the beginning of a shift in international business to areas such as Asia and Africa where the cost of administration and the growth potential compare favourably to the Western world. This trend is likely to continue for many years to come and will itself attract greater international investment to local employment hotspots which will transcend into the property market – creating new and exciting opportunities for those willing to look forward.
That is not to say the Western world will not see an increase in property prices but many experts do believe the likes of Asia and Africa will perform much better.
Moving with the times
We’re talking about trends which are expected to happen over the next 100 years which makes it impossible to say with any great certainty whether these will actually occur. However, if we take a simple look at the business arena we see that many companies are now targeting Asia and Africa as new growth markets with enormous potential. You could argue that these two areas of the world have had “great potential” for many decades now but there does seem to be a significant shift in sentiment.
It is also worth noting that the recent worldwide economic downturn, brought on by the collapse of the US mortgage market, shocked many people. If you look at the situation from a simple risk/reward ratio then perhaps the risks associated with some of the more prominent Western countries have increased?
Conclusion
There is no doubt that moving with the worldwide population has proved extremely beneficial for many long-term property investors in years gone by. This together with changing shifts in business, with many businesses now looking towards Asia and Africa as their future growth engines, would seem to offer interesting opportunities for those looking more long term.