With the first quarter of 2022 approaching its end, the global real estate markets prices continued to rise, which indicates the recovery of countries' economies after the epidemic spread which imposed long closures and restrictions for months, such as the curfew, closures, physical distancing, and remotely works. It's led to delays in construction and building operations and project delivery, and the stagnation of the real estate market.
With the first quarter of 2022 approaching its end, the global real estate markets prices continued to rise, which indicates the recovery of countries' economies after the epidemic spread which imposed long closures and restrictions for months, such as the curfew, closures, physical distancing, and remotely works. It's led to delays in construction and building operations and project delivery, and the stagnation of the real estate market.
The results may be unsurprising, especially the expectations of experts depending on global statistics, that market will recover in the Q1 of this year by a rate ranging 10%-15% in some countries. As "Reportlinker" expects in its latest report, the global real estate market to grow from $3386.1 billion in 2021 to $3,741 billion in 2022 at (CAGR) of 10.5%. The growth is mainly due to firms re-arranging their businesses and recovering from the impact of the pandemic.
In an attempt to study the market closely, "Albursa" conducted research entitled "Did the Real Estate Industry Recover from the Pandemic?", addressed during it inquiries related to the real estate markets position after two years of the epidemic outbreak, the reasons of recovery or stagnation, individuals behavior and the types of homes which people are looking to after the global pandemic changes that imposed by social distancing.
Will the real estate market see a recovery in Q1 2022?
In a large proportion of 80%, the participants on the Albursa questionnaire expected the real estate market in the world would see a recovery from the epidemic effects after hitting the entire sector since the beginning of the year 2020. To prove that, a report issued by "Business Research" company about the future of global real estate, following the outbreak of the epidemic, predicts that the global rental market will grow by 1.6% (from $1.76 trillion to $1.79 trillion) in 2020. The low growth is attributed to COVID-19, where the report predicts growth at 8% from 2021 to reach $2.22 trillion in 2023.
On the other hand, the retreat in construction operations in the second half of 2020 led to a delay in the real estate projects delivery, which helped to raise prices, especially in markets that suffered from a decline in housing supply against high demand. The countries where housing prices rose quickly in 2020 as follow, Canada, Luxembourg, Denmark, the United Kingdom, France, Italy, Poland, Austria, Sweden, and Germany, according to Aixabankresearch.
The global real estate market situation in 2022
The poll conducted by our team showed that 60% of the markets in the world entered the recovery phase but slowly, while 10% see the market returning to its normal condition pre-epidemic.
Moreover, 10% of the respondents in the survey confirmed that real estate sales have increased and entered a more active and hotter phase than normal, while 20% believe that the real estate market did not see any recovery in Q1 2022.
The latest "Statista" studies on the market in France, indicate that nearly half of the French people who intended to sell their properties in April 2020 experienced delays in the process, which prompted about 35% of them to postpone their sale project.
In a comparable context, the cumulative volume of older real estate transactions during the last 12 months in France (excluding Mayotte island) amounted to about 1.2M transactions, according to a market analysis conducted by "Notieres". Pointing out that this volume is registering an increase of 17.5% over one year and although it remains less than the increase recorded in August 2021 (+23% within one year), indicating that the volume of properties transactions has reached the phase of stabilization, which is generally observed in the OECD.
Reasons why the real estate market recovery
40% of the results of the survey were attributed the recovery reason for the of the global real estate market is the low-interest rates, and the offers that motivate clients to buy during the Q1 of this year also got 40%. While the rate of economic recovery for countries and other reasons was 10% for each of them, as one of the reasons behind the recovery of the real estate market.
If we take the real estate market in the U.S. for example, "Investopedia" an investment consultancy, indicates 4 factors that drive the market, namely demographics, interest rates, the economy, and government actions.
The study shows that interest rates have a significant impact on real estate markets, pointing out that changes in interest rates greatly affect a person’s ability to purchase a residential property, due to lower interest rates and the low cost of obtaining a mortgage to buy a home, which led to a higher demand for real estate, which again pushes prices up.
Do some people believe the real estate market not recovering?
Of course, yes, and the reasons behind the failure of the real estate market to recover were varied according to 60% of those surveyed by "Albursa", as 20% confirmed that customers preferred not to buy during the Q1 2022 cause as it wasn't the right time to invest or buy, while other 20% indicated that the rise in inflation prevented the market recovery, whereas all the above-mentioned choices received 20%.
Real Estate Types
Based on the above, the spread of Coronavirus has repercussions on various industries in the world and the real estate sector was unable to escape from this health crisis. Despite the market recovery, there are some changes in the behavior of buyers and their goals.
In a related context, "Albursa" questionnaire confirmed that 60% believe that clients have changed the type of real estate they buy, while the remaining 40% believe that there has been no change in the trends of real estate buyers after the pandemic.
To be clearer, the respondents in the survey see that individuals and families have changed their needs after the epidemic, and they are keener to buy real estate "penthouses - single-family homes - multi-family homes - duplexes". Each of them got 20%.
In turn, the Canadian "Statcan" Center said during the first wave of the pandemic that large families and those living in apartments were at higher risk of dying from COVID-19.
Conclusion
Despite the repercussions of the epidemic on the real estate sector and the purchase movement are still tangibleو and in light of the trend of many countries towards coexisting with the virus instead of working with strict restrictions, the real estate markets in the world have rebounded and expected to further recover in upcoming months.
Simultaneously, many factors were contributed to the recovery and movement of the global market, such as low-interest rates, purchase offers, the economic recovery of countries, demographics, government measures, and easing restrictions.
Finally, the pandemic has changed the behavior of real estate clients and the types of homes they are looking for. This will be more evident in the required spaces, desired asset specifications, and the inside look of the homes.