The real estate industry is a big business generating billions of dollars in revenue across the globe. It is also a significant contributor to the GDP of many developed nations. The growth of the real estate industry signals the base of a strong economy; whereas, weakening of the real estate market could lead to an economic collapse. For instance, the real estate bubble of 2008 in the US caused worldwide economic depression. SpendEdge’s strategic procurement reports show that the real estate industry has been experiencing steady growth over the years due to rapid urbanization and rising household income. Real estate property purchasing and real estate leasing are the two modes of real estate acquisition. Here are the major factors driving the growth of two acquisition modes in the real estate industry:
Real Estate Property Purchasing
- The growth in a nation’s GDP coupled with rapid urbanization leads to the increased demand for more commercial space. Increasing number of jobs are created in a growing economy, and people travel or migrate to such countries for better opportunities. Thus, it calls for an increase in available commercial space like hotels and retail store
- The growth of the real estate property purchasing market is also fueled by the growth of real estate leasing. Properties are bought with a view to earn steady income by leasing it
- Commercial entities consider real estate property purchasing as a tax saving instrument as governments provide tax credits, deductions, and subsidies. Also, to boost growth of the the real estate industry, governments provide tax benefits to encourage general people to purchase of real estate
Real Estate Leasing
- Increasing interest rates discourage the buyer from purchasing real estate in many parts of the world. As a result, most buyers have started leasing properties
- The growth in the real estate leasing market can be attributed to the explosion of MNCs and start-ups in the global economy. MNCs and start-ups prefer to lease the property for office space
- Another growth driver for the real estate leasing industry is the emergence of financial and IT hubs. Financial and IT giants outsource business processes to emerging economies and are responsible for some of the top leasing transactions worldwide
Related Articles:
