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TRUiC Analysts on Global Real Estate Trends for 2021

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How to Invest in Real Estate with No Money
  • The COVID-19 vaccine bodes well for real estate investment confidence.
  • The US real estate market remains strong with an increase from 2019.
  • Australia and Israel experienced housing market crashes, but there is still some optimism expressed by experts.
  • Cities are struggling more than outlying areas – especially in London vs. north-west England.

Despite the effects of the pandemic, the development and dissemination of the vaccine bodes well for a swift economic recovery in 2021. Strong economies around the world are on the brink of an enduring economic recovery and this has a global impact on real estate investor confidence. TRUiC analysts have compiled a real estate investment guide and also pointed out some of the facts below:

Global Real Estate Statistics

According to a report by The Business Research Company, the global real estate market is projected to reach $2774.5 billion in 2021 from $2687.5 billion in 2020. This speaks to a CAGR (compound annual growth rate) of 3%. Furthermore, it is expected that by 2025, the market will reach $3717.3 billion at a CAGR at 8%.

This growth is concurrent to the forecasted economic growth in developed and developing nations, as predicted by the International Monetary Fund (IMF) which projects that the global real GDP (gross domestic product) growth will be 3% from 2021 to 2023. Oxford Economics, in fact, predicts that global GDP in 2021 will be the fastest in 40 years even though that will only even it out to pre-pandemic and pre-economic crisis levels.

In an effort to support economies, numerous strong countries have implemented very low interest rates and quantitative easing programmes. This will have a positive impact on the real estate investment market in 2021.

Even though there is a lot of hesitation regarding real estate investment in the short term, the long-term benefits of the market remain strong. The fourth quarter of 2020 saw more than 1,000 funds in the market; this number is double what it was in January 2016, as reported by Preqin.

Area by Area Analysis

Despite the strong growth seen in the US, Australia and Israel have experienced property crashes. London also saw high-end prices dropping, however, elsewhere in the UK prices are still rising.

The State of Real Estate in the United States

As per a report by Zillow, 5.64 million homes were sold in the United States in 2020 which accounts for a 5.6% increase from 2019. By all accounts, house prices are rising and economists are positive that this past-faced growth will extend into 2021. According to Luigi Wewege, a banking executive, the number of people still approaching offshore banks for domestic property loans in the US remains substantial.

Housing Market in Australia

In early 2021, house prices are projected to drop because of the reemergence of strict coronavirus lockdowns in response to increasing infection numbers. According to Tim Lawless, the research director of property data group CoreLogic, it is expected that house prices will decrease in the beginning of 2021 because buyers are worried about what restrictions may be implemented.

Purchasing a property is a decision that requires long-term commitment, but requires a certain amount of confidence in the buyer that they will be able to afford their mortgage in the future. However, with job insecurity rising as the pandemic affects more and more sectors in severe ways, there are many who are worried about being able to afford required household expenses and the mortgage should job cuts hit closer to home.

Real Estate in Israel

The housing market in Israel suffered a significant blow as a consequence of the pandemic. According to reports by the Finance Ministry, purchases in 2020 plunged to levels which were the lowest in two decades with a 27% drop in apartment purchases from the same period in 2019.

As has been noted in many real estate markets across the world, there has been a shift in purchase preferences. High-end locations tended to face the worst of the crisis. This is a trend which emerged in the US as well where cities struggle more than rural areas. In accordance with this, outlying areas in Israel did not struggle as much as their city counterparts, and some even recorded increased sales.

London vs. the rest of the UK

Savills reports that they expect a mere 1% rise in price in London in 2022, however, in the north-west of England, the prices could rise to 6% in the same year. A five-year forecast released by the company projects that the north-west will see the most growth with a potential 27.3% gain. London, however, only stands at 12.7% in the same timeframe.

The type of property that is attracting buyers has changed immensely because of the pandemic. Populated areas are losing prospective buyers whereas isolated homes, and especially detached properties, are gaining traction.

Final take

According to Nagabhushanam “Bobby” Peddi, TRUiC CEO, “Despite the turbulence of 2020, real estate investing remains a safe and trusted option for those who are looking for long-term investment opportunities. Even though housing preferences have shifted, there is still ample opportunity for buyers to ascertain the nature of their local real estate market and purchase a property that offers attractive returns on investment.”

 

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Business

UK delays review of business rates tax until autumn

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UK delays review of business rates tax until autumn 1

LONDON (Reuters) – Britain’s finance ministry said it would delay publication of its review of business rates – a tax paid by companies based on the value of the property they occupy – until the autumn when the economic outlook should be clearer.

Many companies are demanding reductions in their business rates to help them compete with online retailers.

“Due to the ongoing and wide-ranging impacts of the pandemic and economic uncertainty, the government said the review’s final report would be released later in the year when there is more clarity on the long-term state of the economy and the public finances,” the ministry said.

Finance minister Rishi Sunak has granted a temporary business rates exemption to companies in the retail, hospitality, and leisure sectors, costing over 10 billion pounds ($14 billion). Sunak is due to announce his next round of support measures for the economy on March 3.

($1 = 0.7152 pounds)

(Writing by William Schomberg, editing by David Milliken)

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Discounter Pepco has all of Europe in its sights

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Discounter Pepco has all of Europe in its sights 2

By James Davey

LONDON (Reuters) – Pepco Group, which owns British discount retailer Poundland, has targeted 400 store openings across Europe in its 2020-21 financial year as it expands its PEPCO brand beyond central and eastern Europe, its boss said on Friday.

The group opened a net 327 new stores in its 2019-20 year, taking the total to 3,021 in 15 countries. The PEPCO brand entered western Europe for the first time with openings in Italy and it plans its first foray into Spain in April or May.

Chief Executive Andy Bond said its five stores in Italy have traded “super well” so far.

“That’s given us a lot of confidence that we can now start building PEPCO into western Europe and that expands our market opportunity from roughly 100 million people (in central and eastern Europe) to roughly 500 million people,” he told Reuters.

To further illustrate the brand’s potential he noted that the group has more than 1,000 PEPCO shops in Poland, which has a significantly smaller population and gross domestic product than Italy or Spain.

The company, which also owns the Dealz brand in Europe but does not trade online, has already opened more than 100 of the targeted 400 new stores this financial year.

Pepco Group is part of South African conglomerate Steinhoff, which is still battling the fallout of a 2017 accounting scandal.

Since 2019 Steinhoff and its creditors have been evaluating a range of strategic options for Pepco Group, including a potential public listing, private equity sale or trade sale.

That process was delayed by the pandemic, but Steinhoff said last month that it had resumed.

“The business will be up for sale at the right time. It’s a case of when, rather than if,” said Bond, a former boss of British supermarket chain Asda.

Pepco Group on Friday reported a 31% drop in full-year core earnings, citing temporary coronavirus-related store closures.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) were 229 million euros ($277 million) for the year to Sept. 30, against 331 million euros the previous year.

Sales rose 3% to 3.5 billion euros, reflecting new store openings.

($1 = 0.8279 euros)

(Reporting by James Davey; Editing by David Goodman)

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Fashion-focused livery launch reveals new colours for Gasly, Tsunoda in 2021

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Fashion-focused livery launch reveals new colours for Gasly, Tsunoda in 2021 3

Scuderia AlphaTauri debuted their colours for the 2021 Formula 1 season as drivers Pierre Gasly and Yuki Tsunoda unveiled the team’s new look with the livery for their AT02 racecars. The setting was a fashion-forward launch in the all-new showroom of AlphaTauri, Red Bull’s premium fashion brand.

Salzburg (AUSTRIA) – Formula 1 team Scuderia AlphaTauri served up a stylish preview of the new F1 season with a presentation of its 2021 livery alongside key looks from the upcoming Autumn/Winter 2021 collection of Red Bull’s premium fashion brand, AlphaTauri. The launch – held at AlphaTauri’s new showroom in Salzburg, Austria and presented digitally – marked the first time that drivers Pierre Gasly of France and Yuki Tsunoda of Japan have appeared together as teammates.

After a successful first season racing in AlphaTauri colours, the Italian outfit is looking to challenge the top of the ultra-competitive midfield in 2021, and the two young drivers have been assigned clear-cut roles. Gasly is Team Leader. The 25-year-old, who made his Formula One debut with the team in 2017 under its former name, Scuderia Toro Rosso, has earned two F1 podiums. During the 2020 campaign, Gasly’s maiden win at Monza was a defining moment for him and the team under its new name.

Tsunoda, 20, is the first Japanese driver to race in F1 since 2014, his promotion coming off the back of a fast, four-season trajectory from winning the 2018 F4 Japanese Championship and finishing third in the 2020 FIA F2 Championship to entering the top-level ranks this year. Expectations are high for his rapid style of learning to complement the experience of Gasly.

“The decision to go for Pierre and Yuki in 2021 was taken because Scuderia AlphaTauri’s philosophy is still to give talented young drivers from the Red Bull Junior Program the opportunity to step up to F1 and to educate them – this is why Yuki now gets his chance,” explained Team Principal Franz Tost. “With Pierre on Yuki’s side we have an experienced driver, who can help our Japanese rookie to develop faster, but at the same time we can aim for good results. I think this pair is the best possible scenario to achieve both our targets, and I’m also confident this will be a successful one.”

In 2020, Scuderia AlphaTauri won best livery by a landslide, and the team’s all-new, matte blue and white racecar livery took center stage with the drivers at the fashion event, anticipating the 2021 model that will debut at pre-season testing in Bahrain on 12 March. The test is the precursor to an unprecedented 23-race schedule, and in preparation for the demanding calendar both drivers have spent time at Red Bull’s Athlete Performance Center for intense fitness testing.

“I’m ready to take on the role of team leader. Yuki is a very quick driver, and he will help us move the team forward – we will work together to achieve that,” said Gasly, the team’s all-time top points scorer. “I really believe last year was the team’s best in terms of the way it worked, the development, the performance and the way it managed the race weekends. I’m always hungry for more, and I’m sure we can achieve great things in 2021.”

Tsunoda, who was honored with the Anthoine Hubert Award for best Formula 2 rookie in 2020, added, “I’ve been lucky enough to spend some time with Scuderia AlphaTauri ahead of the season, so I’m already developing strong relationships and learning a lot from them – including Pierre, who is an incredible talent. My main goal is to learn quickly and deliver results as soon as possible, and I’m really excited to get started.”

The launch at the AlphaTauri Showroom not only gave Gasly and Tsunoda a preview of the AlphaTauri Autumn/Winter 2021 fashion collection, but the drivers had the chance to select their new off-grid looks ahead of the season start.

Ahmet Mercan, CEO AlphaTauri, summarized: “This is a triple reveal at a unique point of time: a new AlphaTauri Showroom where fashion meets F1, a first look at the AW21 AlphaTauri collection and the unveiling of the new Scuderia AlphaTauri F1 livery and driver pairing.”

Scuderia AlphaTauri fans don’t have long to wait for racing action: The FIA Formula 1 season kicks off at the Bahrain Test on 12-14 March, in preparation for the Bahrain Grand Prix on 28 March.

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