The total value of all the real estate in the world has increased by 5% in the last year, according to some ambitious sums by Yolande Barnes and the Savills research team, from US$217tr in 2016 to US$228tr now. Global GDP, for comparison, nudged by by 2.3% in the same timeframe.
That means that property is the most valuable asset class on earth, and by quite the margin. All stocks, shares and securitised debt combined come in at $170tr, while all the gold ever mined is worth a (relatively) paltry $6.5tr.
Residential property is the biggest chunk of the global real estate portfolio, accounting for around 75% ($168.5tr) of the grand total. Given that there are around 2.05 billion households across the world, Savills estimates that the average global home is valued at around $82,000.
Most of the world’s residential property value is, as you’d expect, in more developed locations. North America contains only 7% of the global population, but 22% of all residential property assets by value; Europe contains 11% of the world’s peoples, but 23% of residential property by value.
“The greatest potential for growth is in less developed economies,” says Barnes. “Much of Asia has already seen real estate asset price growth alongside the region’s rise of per-head GDP. But Africa appears to have the greatest potential yet for value growth as national economies and household incomes increase. The Middle East & Africa region currently contains 19% of the world population, but residential property on that continent is only worth 6% of the global total.
“Because most of the world’s households are homeowners, we estimate that only 34% of all world residential property is ‘investable’ – actually capable of being let to occupants and traded between investors.”