Inflation in Global Real Estate

As of February 2022, the inflation rate in the US reached a 40-year high with much of the world experiencing the same.

Global real estate practitioners understand that inflation affects each part of the world in unique ways. In addition to inflation issues, the impacts of the global pandemic are continually evolving and it is essential to stay updated on local and international landscapes. It is also essential to stay connected to your CIPS community to navigate these global developments together.

This issue of Global Perspectives provides insight into how inflation and supply chain issues impact global real estate opportunities, both residential and commercial. It gives practical tips for you to track this global issue and to make decisions that will benefit your business.

Because inflation reflects the rise of prices or the fall in the value of money, it’s key to stay updated so that you can remain as knowledgeable as possible for your clients, especially during times of uncertainty.

Read more in Forbes: https://www.forbes.com/sites/forbesbusinesscouncil/2022/01/24/the-supply-chain-and-its-impact-on-industrial-real-estate/?sh=53bde99e781f

What is Inflation and How Does it Affect your Clients?¹

Inflation is the rate of increase in prices over a given time. Inflation remains elevated often due to:

• Shortages in energy
• Unresolved supply chain issues
• Increased cost of living

High energy bills give buyers less money to work with, making them more cautious about spending money on a more expensive property. Understanding your clients’ concerns will help you understand their position and will enable you to help them make the right property purchase for them.

Is real estate a safe investment against inflation?

This is a very difficult question to answer. Investing in real estate is highly dependent on the location and the market of the property.

What does this look like for commercial properties?

With increases in land costs, laborers, supplies, and construction, building new properties may carry an increased cost. However, rents often increase to meet inflation.

• Help your client work out a plan for renovating if they’re considering selling their property
• Keep updated on local supply issues so that you can advise your clients

Understand the big picture effects of inflation

Adding up the costs of all daily purchases, including gas, car payment, groceries, phone bills, etc. over a year will help clients witness the effects of inflation as reflected in increased cost of goods over time.

Global mortgage rates

Track global inflation and mortgage rates to understand the implications for your clients.

Real estate investment can be a way for buyers to diversify their portfolio, but remember to stay updated on the local area where you are buying and selling.

A sample of global inflation rates

Source: https://tradingeconomics.com/country-list/inflation-rate

¹ CBRE, https://www.cbre.com/en/insights/briefs/economic-watch-inflation-at-40-year-high