Real estate investments in the developing world: a sign of growing prosperity?

By | April 27, 2015

In recent years, the world has become more globalized with greater economic integration, while at the same time, the economies of the West have struggled with low growth. Both of these changes have meant that investors looking to invest in real estate have instead set their eyes on developing economies.

Traditionally, investors looked to US and European markets for investment opportunities, but in recent years, investment has been growing in Latin America, Russia and Eastern Europe.

For those who are not risk averse, the emerging markets of Brazil, China and India are attractive. These markets offer greater growth, but at the same time, the relative lack of information makes them a more risky prospect. In the near future, India and China are expected to become the major suppliers of manufactured goods, while Brazil will become a major supplier of raw materials. The changes in these countries are creating an expanding middle class with more money to spend. By 2024, the number of middle class people in these countries is expected to reach 800 million. As the middle class expands in these countries, there will be a corresponding increase in the demand for luxury goods and real estate.

China is becoming a major player on the world economy and has shown breath-taking rates of growth – some of its cities are the fastest growing in the world. Although its rate of growth is still higher than in the West, it is now slowing. However, their economy will continue to grow as the Chinese move away from exporting goods to providing goods and services for their own consumers. Long-term affordable mortgages will boost the housing market and the sales of household goods.

India has also seen fast growth and has performed well in the service sector, but it does face problems with inflation, a volatile currency and poor investment conditions. However, India will see more of its population moving to the cities; the country currently has ten cities that feature among the 30 fastest growing cities in the world. This will create increasing demand for real estate, offices, retail and houses.

Brazil has vast natural resources, growing productivity and high investment rates. Unlike other Latin American countries, its debt position has improved, and it is predicted that Brazil will become the 4th largest economy in the world.

The Middle East’s real estate market is growing despite the recent fall in oil prices. Countries like Dubai are renowned for their spectacular construction projects, and the real estate market has attracted thousands of foreign investors. Kuwait is also attractive to investors, as its immense oil wealth, stable government that supports business, and an increasingly dynamic private sector all ensure that the market remains strong. The Kuwait Real Estate Investment Consortium, headed by Fahan Al-Rajaan, develops tourist attractions and real estate projects and is a powerhouse for development. Read Fahad Al-Rajaan’s bio for more information.

To invest in international property and make a good return, investors need to identify the emerging markets in the coming years. Good information and research is vital to getting in early and making a greater profit. In 2015, some of the markets to watch are Zambia, Patagonia in Argentina, Monaco in France, and Charleston in South Carolina.