BRICs and mortars

How worried should investors be about the apparent resurgence of the Cold War between Russia and the west? Was the dramatic slowdown in Brazil’s economy really just a blip? Is China about to suffer its own subprime crash, and how might a make-or-break general election in India affect its real estate market?

It’s now 13 years since the “BRIC” countries were grouped together by Goldman Sachs economist Jim O’Neill. Since his 2001 report, these emerging economies have indeed taken their place among the world’s powerhouses. Their combined GDP has grown more than five-fold and their share of the world’s wealth has increased from 8% to nearly 20%. Even a tiny blip in any one of them sends shockwaves through global markets. With 40% of the world’s population living on more than a quarter of the world’s land area, the BRICs’ growing prosperity made for an apparently unstoppable real-estate boom, barely checked by the global financial crisis. Their demographic momentum and structural undersupply still present undeniable opportunities, but are the rewards high enough to make the risks worthwhile? In this report for Estates Gazette, I examined the prospects for investors in Russia, India and China. (The Brazil section is by EG features editor Emily Wright.)

Spring in the countryside (part II)

Gold bullion, prime London real estate, muddy fields. If it sounds like there’s an odd one out in that list, there is – in recent years, the muddy fields have proved to be a much more lucrative investment than the other two, as a perfect storm of voracious demand and scarce supply has driven land values to an all-time high, with continued annual growth predicted at 6%. As an asset, land has a unique set of characteristics. It is reassuringly tangible and durable, it is finite – they aren’t making any more of it, as the cliche goes – and it can be used in many different ways by different types of investors. Land is also extremely illiquid, and it exerts a powerful psychological hold over its owners, which can foil economists’ best efforts to predict how it will perform. So how long can values really continue to rise? And what does this rush of investor interest mean for the farming industry itself? That’s what I set out to discover in this feature for Modus, the magazine of the Royal Institution of Chartered Surveyors.