SEATTLE-Locally based Colliers International, the global economy will grow slowly in 2014, with gross domestic product growth remaining below 5% in most countries. A recent report, titled 25 Predictions for 2014, also forecasts expansion in second-tier markets as global investors look for new opportunities.
KC Conway, chief economist at Colliers International, says in the report that “Around the world, we foresee investors looking to emerging foreign markets for opportunities, with European investors focused on Germany, Poland, Spain and Ireland, and Chinese investors moving into Europe and the Americas.” In the US, he says, “rising interest rates could drive up the cost of capital and encourage investors to turn to secondary markets, such as Charlotte, Tampa, Indianapolis and Memphis.”
In the coming year, the US will see additional changes, says Conway, “as we inch closer to the completion of the Panama Canal expansion in 2015, the global supply chain is set to change drastically.”
According to Conway. “US ports will benefit from increased traffic when the canal opens, setting the stage for growth among the industrial sector.”
The Panama Canal expansion is a topic we recently dove into in a recent issue of Real Estate Forum. To read more about that as well as detailed thoughts from Conway on the Canal expansion, click here.
Other key takaways from the 25 Predictions for 2014 report include:
* European Economy Overcomes Recession, Strengthens Investment:
With the debt crisis in Europe dwindling, strong demand will drive recovery in the U.K., Italy, Germany and Spain. As a result, confidence among U.K. investors will rise in 2014, driving the GDP up by as much as 2.5%.
*Infrastructure Improvements and Urbanization in the Middle East:
Middle Eastern economies will continue to see growth beyond the oil industry. Colliers predicts significant spending among Gulf Cooperation Council member countries, as well as infrastructure improvements as urbanization continues throughout the region.
*Office Market Grows in Asia’s Main Financial Centers:
Rents have stabilized in Asia’s office sector, with growth predicted to be at about 5% in 2014 in the five main financial centers: Hong Kong, Shanghai, Singapore, Seoul and Tokyo. Chinese investors will look overseas as they seek investment opportunities in gateway cities, such as London, New York and Sydney.
* Indian Government Regulations to Bring Transparency:
New government policies will bring transparency to real estate regulations in India, potentially changing the sector dramatically in 2014. The office sector will also see growth in demand and rents rising 10% to 16% in the next year.
*Development Activity Rises in New Zealand, Domestic Investment Grows in Australia:
In New Zealand, development growth will include office space and shopping malls, both to accommodate limited space in core markets, and counteract earthquake concerns among aging properties. In Australia, a market that was once saturated by foreign investors, domestic investors have regained the majority stake, accounting for more than 70% of sales.
*Interest Rates and Home Prices Rise, but U.S. Will See Sluggish GDP Growth:
Investors around the world are awaiting news from the U.S. Federal Reserve on the tapering of interest rates. While the move has global implications, the U.S. will continue to see slow economic growth, with the GDP averaging about two percent. The housing market also will continue to recover, with home prices rising up to 9%. The industrial sector will be the top-performer in the real estate industry, with manufacturers making plans to adjust supply chains when the Panama Canal Expansion is complete next year.