Real Estate Market Size 2015
categories: Indexes, Americas, EMEAI, Asset Allocation and Asset Liability Management, Investing (Investment Management), Performance Analysis, Portfolio Construction and Optimization, Risk Management, Asia Pacific, Asset Owners, Alternatives, Hedge Funds, Australia, Fixed Income, Multi-Asset Class, Real Estate Indexes, Research Paper, Real Estate, TEUBEN Bert, Asset Managers (Quant or Fundamental), Banks, MCELREATH Brent, HARIHARAN G G
MSCI began systematically estimating the size of professionally managed real estate investment markets in 2004. These estimates are fundamental to the creation of the IPD® Global Annual Property Index and a range of other multinational indexes and benchmarks, and they provide insights into the coverage of MSCI’s direct property indexes. This paper sets out the 2015 market size estimates and explains the main changes between 2014 and 2015.
- Market size rose in 2015. The size of the professionally managed global real estate investment market grew marginally from USD 7.0 trillion in 2014 to USD 7.1 trillion in 2015.
- China climbed in rankings. Although individual market size estimates changed, they have proved relatively consistent from year to year for the 25 countries within the IPD® Global Annual Property Index. China moved into the fourth position in 2015 among all 32 countries included in the market size estimates while in 2014 it had been ranked sixth.
- Currency movements distorted national changes. Currency movements effectively reduced the size of the global real estate investment market by approximately 4.6% in U.S. dollars (USD). In contrast, capital value growth and new developments in the market, such as new construction and sale & leaseback transactions, were the main contributors to growth in market size.
- The U.S. weighting climbed again. The relative weight of the U.S. increased within the IPD Global Annual Property Index in 2015, for the sixth consecutive year. The higher weighting of the U.S. within the Index resulted from strong capital growth as well as continued depreciation of many currencies against the U.S. dollar.
- The U.K. and Japan held the second and third spots. The U.K., whose market size had overtaken Japan in 2014, maintained second position in the rankings for the second consecutive year.
- Capital value growth pulled up global markets. Capital value growth in local currencies in both the U.S. (6.7%) and the U.K. (8.0%) surpassed the global average of 5.4% in 2015. Japan, the third largest market in 2015, lagged the global average capital value growth by 1.4%.