The global real estate market has gone through a major phase of development over the last 10 to 15 years. Investors around the globe are looking for lucrative ventures to invest in. However, at the same time, they are fighting low-yielding profit margins and low returns. There’s a belief that the real estate industry is one of the fastest-growing industries globally, but there are specific issues and challenges that the industry faces and has to overcome in the long run.
Political uncertainties
The real estate industry is usually affected by any political crisis a country might be facing. With changing regimes, there might be shifts in policy as well. These changes have an impact on the investment in that country. In many cases, these changes affect the real estate sector, directly or indirectly. These new policies that are introduced can affect the overall market dynamics and have an impact on prices.Interest Rate
All major industries around the globe are being affected by the increasing interest rates in their respective countries. The real estate industry gets quite easily affected by these changes in the interest rate. This leads to an overall raise in property prices, along with decreased investment.Lack of awareness
This is one of the major factors when it comes to the real estate industry. A majority of people starting their journey as real estate investors are not aware of the dos and don’ts of the real estate industry. There are a number of companies that are led by individuals who aren’t aware of the property market situation and mostly work using their gut feeling. There are a number of mistakes that new market entrants should avoid while they’re a part of the industry, and should try to educate themselves of the ongoing market trends.Restrictive bank lending policies
Banks have tightened their lending policies toward individual investors. This has led to a marketplace with excess inventory and fewer buyers due to strict loan guidelines.Regulations
Various government regulations have a widespread and unintentional effect on the overall real estate market in every respective country. Globally, there is a need for regulations, but these lead to more considerations for lenders, buyers, agents, and property developers to keep in mind.Infrastructure
Governments have been criticized for their alleged lack of effort in developing proper infrastructure. New housing developments require properly planned water and power supply facilities, which are especially lacking in several Asian countries such as India, Pakistan, Nepal, etc. To find properties where proper facilities are available, there are multiple online property portals like prop. pk and housing.com.Despite the problems faced by the real estate industry, there is an opportunity for growth and development for the masses. Each country's government should have a solid role in developing this sector.
When coming into power, governments around the globe should ensure they maintain the investors' trust on their end. The more investment there is, the better the flow of money in the economy, leading to better economic conditions and overall development.
While passing their respective annual fiscal budgets, governments should adopt a policy of lowering the interest rate to increase investors' overall spending. Investment-friendly budgets and political reforms lead to a stronger and more productive economy.
The government and private sectors should work on educational and awareness programs for investors, real estate developers, agents, and lenders on the policy front. This would lead to better awareness and understanding of the market, benefitting all the relevant stakeholders.
Any regulations put in place by the government should be progressive in nature rather than uniform for all investors, whether on a big or small scale. This would lead to more regular investment in real estate coming in from smaller investors, who form a more significant chunk of this sector. In addition, the state should work on the essential infrastructure provision and developing new projects for the masses. This will help improve living standards and create more trust in the investors since the government will be taking a positive interest in the real field.
