When the United States has an economic sneeze, the rest of the world tends to catch at least some of the cold.
This is partially why the property market meltdown within the world’s largest market has had analysts all over the world worried. Now it appears as if the worry has increased to the point where a recent Reuters study shows that there is a 45% chance of the United States economy going into a recession.
Recessions tend to hit property markets hard because of the high-end cost of even the cheapest lodgings relative to the other industries in a typical market economy, but in this particular tale, it appears as if there is light at the end of the tunnel. That light comes in the form of increased investment in international property that is expected to come from oil-rich countries inhabiting the gulf coast.
Many Gulf States already have exploding property markets domestically, but another thing about native gulf investors is that in recent years, they have started to branch out and invest in foreign property markets, creating additional demand for those markets and additional liquidity. These tend to combine to create strength in areas that might not have had it otherwise.
In 2008, it is expected that these international real estate investments will increase by at least 50%.
This is ultimately very good news for property markets in general as it means two very specific things. It means that demand will start to increase in the international property market in 2008 by significant amounts, and it also means that a gigantic amount of liquidity will be injected into the system in the form of money coming from Gulf investors. Both of these things bode well for an international market that has been reeling from events in 2007.
