During the 2012 Cambridge Real Estate Finance and Investment Conference, PwC real estate partner, John Forbes, conveyed that the global financial crisis could accelerate the timeline for emerging markets to surpass advanced economies. He stated, “Back in 2007, a prediction was made that the GDP of the leading emerging markets would surpass that of the leading advanced economies by 2050. The intervening global financial crisis has slowed growth overall, but the deceleration has been most marked in the advanced economies.”
It is claimed that real estate investors must adjust as emerging markets gain prominence. China, the United States, India, and Brazil are poised to become the four leading economies. This shift necessitates strategic adaptation in investment approaches.
He elaborated, “The shift in the balance of economic power is therefore happening more rapidly. It is expected that there will be three dominant economies by 2050: China, the United States, and India. Then there will be a significant gap to the country that we expect to be in fourth place, Brazil." He further noted, “We are already standing at a milestone. According to the latest data published by the International Monetary Fund in April, the share of world GDP of emerging and developing economies is expected to overtake that of advanced economies for the first time this year.”
Forbes emphasized to delegates that adapting to this changed landscape is not a matter of 'if' but 'when' and 'how'. “Emerging market economies will be a major source of investment opportunities but also of capital. Real estate businesses need to address both. Regarding investing in emerging markets, investor concerns need consideration,” he pointed out. He added, “The providers of capital have become increasingly attentive about a range of governance and transparency issues. This will be a major factor in determining which emerging market real estate businesses will attract international capital.”
He concluded by saying that meeting the changing expectations of investors presents a challenge for many real estate businesses, even in advanced economies. He added that those in emerging markets are generally starting from a less developed point and for them the journey will be longer.