Private equity to drive property growth

86Substantial growth is tipped for the global real estate investment industry, according to a report from multinational professional services firm PricewaterhouseCoopers (PwC) released on February 27.

‘Real Estate 2020: Building The Future’ explores the “rapid urbanisation and demographic changes” currently being seen around the world.

It’s estimated that “global stock of investable real estate” will increase by over 55 per cent between 2012 and 2020.

The future of Sydney real estate

While the report is of a global nature, important lessons can be taken for investors in the Sydney property market, which has seen unprecedented activity in recent months.

The city experienced the strongest housing and unit capital growth across the entire nation last year and investors have been eager to secure their interests in the NSW capital.

The PwC report states that “private capital will play a critical role in funding the growing and changing need for real estate and its supporting infrastructure”.

Such a finding may attract the attention of private developers in high-growth cities, such as Sydney.

Medium and high density housing is becoming more popular in the NSW state and according to a February BIS Shrapnel report, this can be put down to the constrained supply of outer suburban fringes as well as a rising population.

The PwC report noted that “intense competition for prime real estate will force real estate managers and investors to seek out new opportunities for yield. Yet the growing and changing real estate world will present them with a far wider range of risks, which they must be equipped to manage.”

It’s important for Sydney investors – whether they’re buying off the plan or existing real estate – to anticipate future housing demands in an increasingly globalised world.

For instance, tenants are wanting properties with great facilities and access to local transport. The growth of medium and high density housing amongst couples and young professionals may encourage investors to seriously consider purchasing apartments and units.

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