Global Real Estate Value and per capita REV/GDP Ratio

It is well known that real estate wealth accounts for the major portion of total wealth of the world, yet it is hard to estimate the exact total value of real estate in the world. Unlike other commodities and investment markets, such as stock markets and bonds markets, the real estate markets are private markets and without a central platform to report its market capitalization. Furthermore, the heterogeneity of real estate properties and the common government interventions in housing markets make the estimation of total real estate value even more difficult.

Anyway, there are some estimations available. For example, Raza (2016) reported from Savills report that the “global real estate value hits $217 trillion in 2015, 2.7 times world GDP, making up roughly 60% of mainstream global assets.”

He further reported in a chart that residential property accounted for 75% of the total value of the global property, i.e. about $160 trillion. Commercial real estate was valued at about $30 trillion. In comparison, global equities and debt securities only amounted to $150 trillion, with debt accounted for about 2/3. However, he does not mention how the estimates are made, and clearly the figures do not include government buildings, non-profit-making non-residential developments.

Another complication of estimating real estate value is about their investability. Almost all other assets are investable or for investment purposes, but in real estate, especially residential developments and non-profit making developments, quite a large proportion of them is non-investable. According to Raza (2016), $136 trillion out of $217 trillion real estate value are non-investable, ie 62.7% of real estate are non-investable. Thus, if we merely counted investable real estate, global investable real estate value was only $81 trillion, which was less than the sum of the value of equities, outstanding debt and all gold ever mined, as shown in Figure 1.

Figure 1 Global Value of Real Estate and Other Investments. Source: Raza (2016)

Interestingly, the total national value of residential developments seems to be directly related to national GDP and population, as China and the US accounted for 25% and 21% of the global value of residential developments.

A more trustworthy estimation approach is shown in Teuben and Bothra (2018), who estimated the value of the professionally managed investable real estate. Since all the samples in the portfolio were managed by professional companies and the purpose was solely for investment, the data could be more accurate and consistent.

But then the market size of the global real estate was only $8.5 trillion in 2017, less than 50% of Savills estimate above. The US accounted for $2.97 trillion, Japan $0.80 trillion, UK $0.72 trillion. Hong Kong ranked the 7th, amounted to $0.34 trillion.

Furthermore, they analyzed the per capita real estate value to the per capita GDP ratio, which showed the unreasonable floor price level of professionally managed investable real estate value in Hong Kong, as shown in Figure 2.

Figure 2 Per Capita Real Estate Value to Per Capita GDP of various economies. Source: Teuben and Bothra (2018)

When most of the economies performed at a range from 10% GDP to 25% GDP, Hong Kong’s figure was over 100% and was the only one economy in the sample that exceeded 100%.

The explanation provided is HIGH VALUE PER FLOOR AREA! But I think this is not an explanation but the consequence. A more plausible and tenable explanation is the fact that land supply in Hong Kong is monopolized by the government, and the lack of democracy results in crony capitalism in Hong Kong, thus resulting in HIGH LAND PRICE POLICY. (Vines, 2014 and Wong, 2016)

It may also reflect that too much land plots are used to develop professionally managed investable real estate in Hong Kong, resulting in insufficient land supply for residential and other not-for-investment-purposes land use. If we compare the figures between Singapore and Hong Kong, where Singapore has a higher per capita GDP than Hong Kong, yet the estimated market size of Singapore was only US$0.1573 trillion, just about 46% of that in Hong Kong! (Figure 3)

Figure 3 Estimated Market Size of Pan-Asia Economies. Source: Teuben and Bothra (2018)

Even though the Government of Hong Kong always claims that land supply is insufficient in Hong Kong, but if you take a look at the vacancy rates of office and flatted factories, you would agree that investable real estate supply are more than enough. For example, according to Rating and Valuation Department (2019) latest statistics, the vacancy rates of Grade A, B and C office were 9.6%, 10.4% and 7.0% in 2017. The vacancy rates of retail (private commercial) and flatted factories were 9.0% and 6.1% in 2017.

Anyway, this report provided the estimated market size of each individual economy, it is a good data source for global comparison. For example, it shows that the estimated market size of the professionally managed investable real estate in Hong Kong amounted to US$0.3423 tillion, which was more than 4% of the total global coverage (US$8.5311 trillion). Per capita market size of Hong Kong was therefore about US$45,000, which was more than the per capita GDP of US$37,927, as shown in Figure 2.


Teuben and Bothra (2018) Real Estate Market Size 2017: Annual Update on the Size of the Professionally Managed Global Real Estate Investment Market, MSCI, June.

Rating and Valuation Department, HKSAR Government (2019) Completions and Related Statistics, retrieved on 19 Jan at

Raza, S. (2016) Global Real Estate Value Hits $217 Trillion in 2015, 2.7 Times World GDP, ValueWalk,

Vines, S. (2014) Why Hong Kong’s latest No 1 ranking was greeted with silence, SCMP April 1.

Wong, R. (2016) Hong Kong is the king of crony capitalism and that should be a worry for the Competition Commission. SCMP June 7.



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