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What effects the world real estate markets?

At Tropical Properties Phuket may well be the centre of our universe, but the property market in Phuket is of course affected by the global economy. A new research piece has identified some key findings that make for some interesting reading:

  • The global economy is picking up, government spending is expected to increase in 2017.
  • Real estate capital values are holding firm despite a weak start to 2016.
  • Interest rate are set to rise in 2017, but not enough to cause any major effect on the economy.

The good, the bad and the ugly…….

The Good  – Russia and Brazil are emerging from recessions. Their recessions have been a drag on global growth. Government spending is back on – China boosted spending by 1% of GDP in 2016, the UK has abandoned plans to balance the budget by 2020, and Spain and Portugal have been given longer to reduce their deficits. Germany is considering tax cuts.

The Bad – In the US lending conditions for the construction industry have continued to tighten in 2016, possibly at the behest of the Fed.

The Ugly – The British pound has depreciated by 17% since June against the value of the US dollar and 15% against the Euro. Assets and exports are cheaper in the UK, but it could also undermine sentiment in the world’s 5th largest economy. China’s exports fell by 5.6% and imports by 1.9% for the year ending in September. Further bad news is likely to adversely affect global sentiment.

What does all this mean for Real Estate ? Solid domestic demand in the USA, improving sentiment in the G7 and the end to recession in Russia and Brazil should mean stronger growth in the second half of 2016.

For the full report click here.

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