Property market eases as world economy slows down

London based global real estate firm Knight Frank has said the world economy is in the midst of a synchronised slowdown following several years of strong growth.

In their Frank global market overview for this month (October), the firm said that while a global recession looks unlikely, several countries are at risk of entering a technical recession later in the year. 

The overview said this slowdown and raised risk profile is prompting investors to not only focus on prime assets but also to consider opportunities for long-term income.

At the same time, it said global commercial property investment activity has seen a modest easing during the year. 

The report said investment volumes in the first half of the year had fallen in nine out of 10 of the world’s most significant cities: “In contrast, cities in the next tier down saw rising investment over the same period.”  

“Recent reports suggest there is $330 billion (Sh34 trillion) of unspent capital in the hands of private equity funds targeting real estate, while a number of pension funds are still edging up their allocations towards real estate,” the overview stated. 

Strong demand

It said that globally, large, well-developed real estate markets continue to see strong demand for industrial property. 

“Driven primarily by strong demand from retailers as they reorganise their supply chains to better serve an e-commerce driven world, logistics space on the outskirts of major urban conurbations typically remains undersupplied and yet in high demand,” said the report.

On the other hand, it said global residential markets are witnessing a general moderation in price growth. 

“The Knight Frank Prime Global Cities Index, which tracks the movement in luxury residential prices across 46 cities, increased by 1.4 per cent in the year to June 2019, up marginally from 1.3 per cent in March 2019 but still significantly lower than its four-year average of 3.8 per cent,” it went on.