CB Richard Ellis has an interesting white paper out on why they expect international commercial real estate to continue to increase in value. The one part that really caught my attention is the rise in petro dollars. While the average consumer see’ the price in a gallon of gasoline, the huge windfalls are being captured by those that pump the oil from the ground.
As seen in Dubai, these dollars have to go somewhere and there is a huge influx into the commercial real estate world’s infrastructure. Now these oil mavens can not continue to only build in their backyards so expect to see the influx in their windfall earnings to continue to go to real estate.
The 3 main reasons commercial real estate is booming worldwide are according to CB Richard Ellis:
- The rise of international institutional investors with heightened participation across different regions;
- Economies of the BRIC Group (Brazil, Russia, India and China) are growing at a rapid rate, and this phenomenon is attracting an influx of international capital into emerging markets; and
- The growing power of the petrodollars, which are increasingly flowing out of the Middle East and towards global real estate markets.
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Dubai is amazing. The skyscrapers, the reclamation of land from the sea and the development are all impressive. As impressive as that is, the poverty of the workers is equally amazing. Oil, dollars and traditional values? Right!
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