Skip to 0 minutes and 4 secondsAround the world in dollars and cents, is a seminal piece of work. It's that human desire to quantify everything. And until you can work out how big everything is, you're really not entirely sure what it is you're dealing with. So working out the value of the world's investible assets is about contextualising the things that are out there. Working out the total sum of world real estate is important because it puts it in context of the things that you are able to invest in. So, the world's share markets, that's fairly easy to value because you sit there and say alright what's the value of the share markets around the world?
Skip to 0 minutes and 50 secondsAnd you get to $55 trillion pretty quickly, because that's easily recognisable. The value of the world's gold, that's easily obtainable for $6 trillion. The world's bond markets, again, the value of currencies, and so on. But when it comes to real estate, you've got all sorts of real estate out there. Everybody's house, and their holiday houses as well. You've got all the government assets, you've got all the farm land, and then you've got all the commercial assets. And it gets difficult because not everybody accurately knows the value of absolutely everything. But working through all of that took an awful long time. And it's worth looking at because as we said, it puts it in context.
Skip to 1 minute and 35 secondsAnd so we came up with a figure of approximately $217 trillion. So against $55 trillion in the world's equities markets, and $6 trillion for the value of all the mined gold in the world, it shows, quite clearly, the importance and the value of global real estate.
Putting a price on the world's Real Estate
Nearly 60% of the world’s wealth is in real estate.
International real estate firm Savills estimate that the world Real Estate market is worth $217 trillion US dollars. Their report Around the world in dollars and cents reveals the latest trends in the increasingly global Real Estate market. Their key findings include:
Global real estate assets comprise nearly 60% of the value of all global assets, including equities, bonds and gold.
Three-quarters of global real estate value is residential, 13% commercial and 12% agricultural.
About 1% of global real estate assets trade each year in big ticket deals.
Long-term global investment prospects are governed by population growth and the resulting demand for housing.
Near-term prospects for higher interest rates mean the global search for yield and rental growth is now full-on. (2016, p 3)
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Savills 2016, ‘Around the world in dollars and cents’, Savills World Research, Savills, pp. 1–39, retrieved 27 June 2017, http://pdf.euro.savills.co.uk/global-research/around-the-world-in-dollars-and-cents-2016.pdf.
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