What Does 2021 Have in Store for Real Estate Markets Around the World?

Surprisingly, 2020 was a promising year for real estate in most sectors. There were casualties, as the retail and office markets experienced significant slow-downs. Yet, it was a good year overall. 

With 2021 starting with the promise of vaccine availability soon, things are starting to look up. Does that hold for real estate? Let's analyze different reports from the hottest markets and see for ourselves. 

Real estate in the US was a highlight, just like around the world. As the entire economy seemed to slow down considerably, the industry had one of its best years—almost ever. Even the usual slow-down in the fall wasn't a problem during COVID-19. 

Mortgage rates aren't likely to increase during the entire year. Even experts predicting an increase estimate it at around 3.4% maximum. The lowest point might be during the year's start before vaccination is widely accessible. 

2020 also experienced skyrocketing housing prices, yet this year might slow them down. One of the main reasons is vaccination. Experts estimate that vaccination and subsiding from the virus's side could increase supply. 

Competition has been calming down every month since October, and there's little reason for the trend to stop. The only factor that might change is Biden's tax incentive proposal for first-home buyers. While it might not be a top priority, it's still worth looking out for it. 

2021 might also bring new construction projects, especially if demand keeps overwhelming supply. Aligning with consumer preference could also create new standards, particularly to meet people's desire for more space. Money-saving and health-related features might follow suit. 

Suburban housing demand skyrocketed amid COVID-19. Of course, it was partly due to social distancing. However, remote work's popularity also lowered the need for living in the city. Therefore, the suburbs might remain as the preferred housing option for a while. 

Now, there's little way to avoid foreclosures altogether, especially given how many industries have been struggling during the pandemic. That said, it's unlikely that it will come close to the housing market crash. Interestingly, the demand seen during COVID-19 could cushion this effect. 

The CBRE also released a market outlook for 2021. As Brexit takes a back seat to favor fighting coronavirus, the picture gets more precise for real estate. Thankfully, the report offers plenty of insight into several sectors. 

For the economy in general, it suffered considerably from two nation-wide lockdowns. The CBRE estimates complete recovery for after mid-2022, mainly driven by consumers. Luckily, low-interest rates and inflation, as well as Brexit certainty, support the process. 

Overall, 2021 will keep the office sector underperforming. However, some sectors will experience growth. Similarly, equity targets London's market, and recovery should come sooner than later. Despite remote work's popularity, office space won't lose all demand. 

The retail market has also been a noticeable victim during the crisis, especially because of lockdowns and the online market. Warehouses and supermarkets have remained strong even during the pandemic. Still, they'll need to rethink their approach, just like most industries. 

The logistics sector had already been growing during the pandemic. It shows no signs of slowing down during 2021, especially with the increasing demand against weak supply. As more investors find their way into the market, yields could fall more. 

The residential market has been the biggest winner when it comes to real estate. While the commercial sector has had ups and downs, demand just keeps increasing for housing. The CBRE expects new records in the next few years, especially with fiscal support. 

Naturally, hotels and hospitality experienced some of the largest losses. It seems like the situation will remain until vaccination becomes easily accessible. In the meantime, innovation and collaboration are best for damage control 

You might have noticed a trend so far. Commercial real estate has taken hits on many fronts, but it has benefited in several others. On the other hand, the residential side has been flourishing. Australia isn't the exception.

After a pandemic shut-down and exiting a recession, Australians were eager to invest in properties. Now, with low-interest rates, demand has been escalating quickly - and there's no sign of slowing down for 2021. 

Naturally, higher demand against current supply means prices will increase. Australians are willing to pay more for their assets. Lower costs for borrowing also play an important role in driving this willingness upwards. 

The desire to invest in properties, regardless of their price, isn't solely for people buying their first place. Older generations have shown extensive financial support for their offspring when purchasing properties. The same article from Domain mentions several cases of financial aid from parents. 

It's easy to see why investors have shown so much interest in the Australian housing sector. Since August, the market has been flourishing, performing noticeably better than it did before the COVID-19 crisis. While it might pose a problem for lower-income buyers, it's still a prime investment option. 

New Zealand has been going through a housing bubble, and it seems there's still plenty of momentum. According to The Guardian, prices are still hitting record highs for a couple of months in a row. 

2020's final quarter showed the highest growth since 2004, which experienced a 6.6% growth rate in February against the 2020s 6.1%. Extraordinary markets include Tauranga, Gisborne, and Masterton, with property values increasing by over 30%. 

Properties present a safer investment than most assets during the pandemic. They've always been the go-to for accumulating wealth, and the pandemic has repeatedly proven the reason. Low mortgage rates and prominent demand have kept the bubble going. 

Naturally, the issue has raised questions about its financial implications for low-income people. The housing supply in New Zealand has been tight for a while now, and the article mentions how experts start to consider it a national crisis. 

The Middle Eastern market has followed the example from other countries. However, Arabian Business has several tips for 2021 investments. As you'll see, we have a few unique situations going on with the Middle East that contradict other markets. 

Defensive investment strategies have been the staple during 2020. They've made investors focus on core assets, resulting in yield compression. Teleworking's growing relevance has also reduced investments in the office sector, which descended to 35% from a 40% share. 

Investment in industrial assets has escalated thanks to the increasing demand for digital adoption and technological innovation. Data centers and the logistics sector have enjoyed growth, from 12% to 17%, during the first quarter. 

Speaking of logistics, it has also grown noticeably along with warehouses. However, it hasn't been consistent. Markets like Dubai and Saudi Arabia present stronger demand than others. With emerging markets like Egypt, demand has been stable, but it's expected to grow with infrastructure development. 

The residential market has been going through the same situation as other markets. It projects solid growth, particularly for senior and multi-family housing. However, residential sectors, in general, show positive expectations. 

Finally, office real estate has shifted demand toward stable occupants. Interest in sectors like healthcare and data centers will also grow noticeably. Limited supply also helps increase their pricing. Overall, transaction activity is likely to rise during the year. 

Finally, the Canadian market seems to follow the example from many of its peers. Toronto Storeys has a great article from October about trends for this year. Generally, everyone should embrace evolution and innovation during 2021 to guarantee swift recovery. 

Rural and suburban properties have gained popularity, thanks mostly to remote work. People have started to venture to cities. Mid-sized locations will experience quick population increases, and even smaller towns, like Ottawa, might follow this trend. 

The retail sector has been one of the primary victims in virtually all countries. The virus catalyzed the growth of eCommerce. Due to social distancing and the rising popularity of online shopping apps, the retail sector will likely not recover entirely to pre-COVID levels. 

On the other hand, storage has grown into one of the most popular investments for companies. Online stores still need to keep their products somewhere. Without retail fronts, storage facilities become the ideal investment. 

Interestingly, the article reports that only 34% of workers expressed preference towards full-time remote work. Therefore, office spaces might not lose as much interest as you'd think—or even as in other countries. 

Separately, virtual health services have grown significantly during the pandemic. However, that's not a menace to traditional healthcare, like it is for retail. Still, repurposing medical offices might become an upcoming trend. 

There's not much to say here since you can probably infer it. Property technology has grown with digital adoption needs during the pandemic. Allowing online payments, remote work and communications, and more features have shown property managers how efficient these systems are.