Real Estate Investments in 2020 – Trends and Tips

We’re close to the end of 2019, a year that proved to be very fruitful for real estate investments, although geopolitics at a global scale had been deteriorating. It’s a good time to start and reflect on what 2020 might bring and that’s exactly what we’re going to do. Together we’ll look at both
emerging and developed economies and see what the experts are saying.

Emerging Economies

Whether we like it or not, emerging economies will continue to be the growth engine for the global economy and because of that plenty of real estate opportunities could arise. There had been increasing investments in Africa and South Africa continues to be one of the most important destinations.

“The year 2020 could be one favorable for ZA investments, especially if we think about logistics
warehouse", says Ofir Eyal Bar, a real estate investor that is active on these markets, "This is a trend that continues as the economy continues to expand and more foreign
companies are attracted by the local potential”. 

It seems like South Africa will continue to be one of the safest places for real estate investors, given the developed regulatory framework and the continued urbanization trend. However, other African nations are interested to attract foreigners, but especially in the north, there’s still unpredictability in terms of politics and regulation.

"This potential goes also beyond the south-African market", says Ofir Eyal Bar, "Brazil, China and India, as well as other emerging economies, are expected to show real estate potential in 2020, especially if favorable conditions will keep being supportive".

The debate is complex on whether the global economy will slow abruptly next year and that mainly has to do with the tensions between the United States and China.

Developed Economies

Moving towards the developed economies, we must talk first about Japan, which is where the Olympics will take place. Because of such a big event taking place in the country, the real estate industry should be extremely active by the summer of 2020 and that’s an encouraging sign for investors.

Other than that, we must also take into account that the BOJ (Bank of Japan) continues with a negative-rate policy and that kept home loans affordable. According to rethinktokyo.com:

“A 10-year fixed-rate mortgage currently clocks in at around 0.65%, with Sumitomo Mitsui Trust Bank offering one of the lowest rates available, starting from 0.53%. This has stimulated the Tokyo property market, with prices in large cities finally nearing pre-bubble era territory again. In 2018, residential land prices in the greater Tokyo area rose by 1.3%.”

Europe could be another place where major real estate deals could take place in 2020. Even though The United Kingdom is overshadowed by the Brexit uncertainty, we could easily find plenty of major deals in the real estate investors in 2019 and that could continue in the year ahead. Germany, France, and The Netherlands, especially if we talk about less-developed areas, could be attractive places where big companies will search for new buildings to expand their activity.

Negative factors to take into account

As with any other industry, real estate investors must put both the potential rewards and risks in the balance in order to asses where the best opportunity is located. If there’s one word describing 2020 that’s “uncertainty”. We already see that major companies around the world are reluctant to boost investments and that has to do with a series of factors.

On one hand, we have technological development reaching a new stage with 5G. It is expected to disrupt many industries and until more clarity will be in sight, investors will hold on their pockets.

Second of all, we must acknowledge that there are growing frictions inside and between nations. The US-China trade war continues to be one of the main highlights, but Japan-South Korea, India-Pakistan, and Saudi Arabia-Iran should not be ignored. Political instability does not provide incentives for investors to continue to expand their activity and if things won’t settle, we could see geopolitics starting to drag more on real estate.

Thirdly, we must talk about the short-term debt cycle, or the traditional business cycle, as most of the people call it. It’s been more than 10 years since the last economic setback and looking at history we can see these periods come from time to time. With monetary policy very accommodative around the world, the economy could get enough stimulation, but this won’t be the main driver.

Summary

We can conclude that 2020 will be a year with great opportunities for real estate investors, but also one that will raise many questions when it comes to geopolitics. However, 2019 had been fruitful despite some major problems and if mutually beneficial solutions can be reached, we should continue to see the same positive trend in real estate next year, as well.