Expanding business and retail operations across the globe will drive revenue growth
Los Angeles, CA (PRWEB) October 19, 2012
The Global Commercial Real Estate industry includes firms that specialize in a variety of real estate activities, including brokerage, property and facilities management, research and analytics, consulting, valuation, appraisal, construction and asset management. Changes in the commercial real estate market, including vacancy rates, property values and credit activity, influence demand for industry services. According to IBISWorld industry analyst Andrea Alegria, the global recession adversely affected the industry, with revenue expected to decline an annualized rate of 2.8% to $5.2 trillion in the five years to 2012. Major industry markets have contended with high unemployment, deficit and debt crises in the United States and Europe, which have created uncertain business environments and staved off investment in commercial real estate. During 2008 and 2009, credit became severely constrained and real estate market activity contracted sharply in most markets around the world as a result of the global financial crisis. Industry revenue declined 7.2% and 8.8% in 2008 and 2009, respectively, as real estate values and transaction activity declined.
Since then, central banks across the globe have helped stimulate economic recovery and rekindle investment into the real estate sector by curbing interest rates. Booming commercial real estate activity in Asia (particularly in China) and Latin America has also helped to offset industry declines, says Alegria. China's fast-growing population, economy and consumer base have triggered construction of shopping centers, hotels, apartment buildings and industrial spaces at an accelerated rate. Latin America's growing middle class, coupled with an existing wealthy class, has also boosted demand for commercial real estate investment. Due to these factors, industry revenue started to recover in 2010 and has been growing slightly since, but weighed down by slow economic recovery in the United States and the European debt crisis. Revenue is expected to grow 1.1% over 2012. The Global Commercial Real Estate industry is influenced by domestic conditions, including employment, corporate profit, consumer sentiment and interest rates. This trend has been driven by the financial markets, as investors look abroad to capitalize on growth in emerging markets or favorable exchange rates. The demand for real estate services in emerging nations such as China, India, Brazil and Russia continues to rise as foreign investors look to capitalize on the rapid increase in each country's economies. To meet the demand of investors, large commercial real estate service firms are expected to continue to expand global services. This trend is also supported by general globalization within the business sector, as firms rely on global real estate firms to support expansions into foreign markets.
In addition to growth, the ability of firms to operate in multiple markets minimizes risks related to specific real estate markets in local countries or regions. As clients increasingly look for firms that offer a full range of services across a wide geographic area the number of mergers, acquisitions and strategic alliances is expected to increase over the five years to 2017. In the next five years, revenue is forecast to rise. During this period, expanding business and retail operations will drive industry growth, as unemployment declines and consumer disposable income and corporate profit improve. Nonetheless, the industry will still be challenged by weak economic conditions in Europe and the implications of a significant slowdown in China's economy. For these reasons, industry research firm IBISWorld has updated its report on the Global Commercial Real Estate industry.