Forestry included in major global real estate value index for first time
Proving just what a major player forestry has become on the world investment stage, the asset class was included in a major real estate global value index for the first time.
The Savills’ measurement of total world real estate looks at the worth of the entire developed property world, including residential and commercial property as well as agricultural and forestry land. The international real estate adviser set the total value at $217 trillion, which amounts to 2.7 times the total global GDP. The index highlighted the fact that property and land made up around 60 per cent of all mainstream global asset classes, accounting for a major proportion of all national, corporate and individual wealth streams.
Showing what a power player forestry has become in terms of investment and valued asset classes, the genre was included on the index, which was published this year for the first time. It revealed that the total value of agricultural land and forestry was an estimated $26 trillion. Of this, around 30 per cent was found to be either corporately or institutionally invested. The vast majority of forest and agricultural land was found to be owned by non-investing entities, operators and occupiers. As this sector is viewed as having such strong potential for future growth, it was especially apparent that the owners were of this type in emerging economies.
Head of Savills world research, Yolande Barnes, highlighted the significance of the index, saying: “To give this figure context, the total value of all the gold ever mined is approximately $6 trillion, which pales in comparison to the total value of developed property by a factor of 36 to 1.
“The value of global real estate exceeds – by almost a third – the total value of all globally traded equities and securitised debt instruments put together and this highlights the important role that real estate plays in economies worldwide. Real estate is the pre-eminent asset class which will be most impacted by global monetary conditions and investment activity and which, in turn, has the power to most impact national and international economies,” added Ms Barnes.
Asset class price inflation has been seen over the last few years as a result of capital growth and major levels of investment activity taking place in the world’s major real estate centres. Couple this with quantitative easing and the linked low interest rates which have meant lower real estate yields and higher levels of asset appreciation and it goes some way to explaining the skyrocketing value of property and land across the globe.
The index – which was compiled using data from a vast range of sources, including census, house prices and national property records – found that the largest component of global real estate value was residential properties, which totalled $162 trillion. The main percentage of the value was in the west, with 21 per cent of the globe’s total residential asset value located in North America. Europe accounted for more than 25 per cent of the value in terms of commercial property assets, while Asia and Australasia accounted for 22 per cent. Just five per cent of the total value was accounted for by commercial property in South America, the Middle East and Africa.
GWD Forestry spokesman, James Barrett, said: “The fact that Savills has seen fit to include forestry and agricultural land holdings on its major global index for the first time highlights that the asset class is a real force to be reckoned with. Forestry is holding its own among the most valuable asset classes in the world and the growth of and interest in the sector looks set to continue over the coming few years.”