Dramatic demographic changes in the west and explosive growth in emerging markets are fuelling Remax’s “very bullish” outlook on the global real estate business and its brand, Walter Schneider, president and co-founder of Remax Ontario-Atlantic Canada Inc., told The Times Business.
Mr Schneider, who was in Malta recently for Remax’s quarterly gathering of European and Middle Eastern master franchise holders, believed that although the US property market was “bouncing along the bottom”, its health was not set to deteriorate further.
Significant urbanisation will determine the performance of the global property industry as people move into cities to fulfil their lifestyle aspirations.
“There are 6.9 billion people in the world, two billion of whom live our typical, Western lifestyle,” Mr Schneider explained. “Around 3.5 billion people live in cities. Now, there are 20 cities in the world with a population of more than 10 million, including London, Tokyo, Mumbai, New York, and Sao Paulo. In 15 years’ time, there will be 30 cities of this size. By 2050, 70 per cent of the world’s population will live in cities.”
The US was the only nation within the G8 that had the capacity for organic population growth. The rest all relied heavily on immigration, which brought positive implications for the property sector: official figures show immigrants buy property in Canada within just seven years.
Around the world, buyer profiles have changed dramatically in the last 25 years: the number of single person, single female, and same sex households has grown so significantly that Mr Schneider said the traditional house buyer of 30 years ago featured little nowadays. In North America, almost 50 per cent of households are established by common law relationships. The paradigm shift had been caused by people getting married or having children much later than they used to.
Mr Schneider is confident about the prospects of the US property market and stressed that although it was not in recovery, it will not get any worse. He pointed out that at the height of the market 1.5 million realtors were responsible for an annual 7.1 million transactions. About 1.1 million realtors would handle a forecast 5.3 million transactions this year, so despite the ‘pie’ shrinking, there were fewer people sharing it.
These contained proportions did not, however, suggest the ‘cleansing’ in the US had been completed. Mr Schneider pointed out Bank of America had about 800,000 properties that were within 90 days of default and an estimated 1.1 million defaults on mortgages were forecast for the year.
Around the world, a new crop of buyers – the ‘Millenniums’ born between 1971 and 1994 – were coming to the market and there were 71 million of them in North America alone.
“They are an interesting audience because they are very brand-centric which positions our product well,” he added. “Last year, they spent $300 billion in North America on consumer products. They are coming into the housing market in Europe, Middle East and Asia. Six years ago in India, the average price of a house was $15,000. The average price now is $200,000. That is how the markets in these countries are compounding.”
Remax, the world’s largest real estate group with a network spanning 85 countries and 90,000 professionals, is very optimistic about the global real estate business, particularly as each market presented specific opportunities. Remax’s capacity to tap them was translated in the brand opening two franchises around the world a day.
Mr Schneider singled out the “explosive growth” in Brazil over the last 18 months where 140 franchises have been sold. In Canada, his own home market, Remax had even greater market share than in the US where the brand was born in 1973.
And, he emphasised, there has never been a better opportunity to buy, with interest rates at historic lows and property prices more accessible than ever.
This is Mr Schneider’s fourth experience of a global downturn in a career spanning 34 years and not even the woes of the eurozone’s peripheries will dampen his confidence.
Remax commands 20 per cent market share in Portugal, and opportunities continued to present themselves consistently in Spain.
“Spain has challenges and there is market correction,” Mr Schneider explained. “Historically real estate climbs at annual rate of five or six per cent. When it goes up 15 to 20, then a correction is expected.
“Spain is a healthy, vibrant country and the crucial foreign buyers are sitting on their hands right now. The aging European baby boomers in England, Germany, France, and Belgium still want to go to Spain for the warmer weather and it is easily accessible. They will not likely fly to North America or Asia so readily. Spain has the best weather in Europe in terms of seasonal climate. There is no lack of capital in the world, it is just sitting quiet and will loosen up over time.”
Around 60 master franchisers travelled for the Malta meeting to discuss challenges and opportunities to the regional property markets. Their agenda included technology, franchise marketing, training and systemisation. Mr Schneider explained franchise holders relished opportunities to gain insights on international colleagues’ business environment and the meeting came to the island after previously being held in such countries as Israel, Turkey and Spain. The next will be held in Vienna in September.
Walter J. Schneider co-founded Remax Ontario-Atlantic Canada Inc. in 1980 with his business partner Frank Polzler. He is president of Remax Ontario-Atlantic Canada Inc., Remax of New England Inc., Remax North Central Inc., Remax Indiana Limited Partnership, PMSCS Real Estate Franchising Inc. (Remax Europe), Polzler and Schneider Holdings Corporation and Integra Enterprises Corporation.
A graduate of Toronto University, he was named one of Canada’s top CEOs by Financial Post Magazine in 1995 and sits on several boards of other business interests outside Remax.