Despite a slight dip in value in 2022, global real estate continues to hold the lion’s share of worldwide wealth. Property remains the largest asset source, well ahead of equity and bond markets and gold. In the country rankings, China takes first place in the top ten, with Brazilian property in 9th position.
Residential property is a bastion of wealth
A recent survey by Savills found that the total value of global real estate in 2022 reached US$379.7 trillion. The figure is slightly below 2021’s total, but 18.7% higher than 2019.
Furthermore, the survey finds that real estate reigns supreme in terms of global wealth. Property is worth more than all bond and equity markets combined and, as a result, nearly quadruples the value of global GDP. The value of other assets also pales in comparison. For example, gold is worth just 3% of the world’s property market.
Residential property dominates the table, accounting for over 75% of the total. Commercial comes in a much more modest second place, with around 13%, while agricultural real estate amounts to 11% of the US$379.7 trillion.
2022 mixed year for all assets
Last year showed a drop in the values of most assets except for gold. Residential real estate dropped slightly by 1.6% last year on the back of higher interest rates, which tempered investment worldwide. Commercial property saw a slightly more pronounced dip, with a 1.8% loss in value in 2022.
Debt securities also experienced a downturn in value last year, when they lost 3.2%. However, equities had the most significant downward slide last year, when their value plummeted by 20.3%. In contrast, gold continues its upward trajectory, with a 2.2% increase.
Steady rise in value for global real estate
Despite last year’s dips, all property types show solid upticks since 2019. Residential real estate saw the highest, with a 21.1% increase in value since 2019. Analysts attribute this rise to low interest rates and consistent demand for housing.
Commercial property posted a 14.4% rise over three years. This uptick also has its source in favourable lending rates and government incentives, encouraging investors to buy commercial real estate.
Although a large proportion of global real estate wealth is concentrated in Europe and North America, China sits in the top position in the world rankings. Its real estate accounts for 26% of the global total.
The US comes in second place, with 19% of the world’s real estate, while Japan takes the third spot. Savills points out that over two-thirds of global property value is in G7 countries plus China.
Savills also highlights the disproportion between real estate value and population. For example, Canada’s property is worth considerably more than real estate in Brazil, a country with over 214 million people. However, Brazil takes 9th position in the table, just behind South Korea, but ahead of Australia.