Real estate investments and population growth
People - Investing
Wednesday, 05 August 2009 19:29

There is some evidence that in the very long run (centuries) house prices do not go up any faster than inflation, see my article on Real Estate in the Randstad.

But on the scale of decades the value of real estate depends on the following:

  • Population growth,
  • Economic growth,
  • Inflation rates,
  • Interest rates

The last three factors are difficult to predict. The factor population growth however can be predicted, see the UN World Population Database. These predictions are not always successful but they do give an indication. Often population growth triggers economic growth, making this factor even more important.

The data of this UN website gives the following list of fast growing countries:

CountryPopulation growth 2010-2050
Australia/New Zealand30%
Bangladesh40%
Bahrain50%
Belize60%
Benin120%
Bolivia40-50%
Botswana30%
Brunei60%
Burkina Faso120%
Canada25-30%
Cambodia50%
Cameroon75%
Colombia30-40%
Comoros80%
Costa Rica40%
Côte d'Ivoire100%
Cyprus25-30%
Djibouti65%
Dominican Republic30%
Ecuador30%
Egypt35%
Equatorial Guinea100%
India30%
French Guiana100%
Gabon60-70%
Gambia120%
Ghana90%
Guatamala90%
Guinea120%
Guinea-Bissau100%
Haiti30%
Honduras60-70%
Ireland45%
Israel45%
Jordan50%
Kenya100%
Kuwait70%
Laos50%
Madagascar100%
Malawi120%
Malaysia40%
Maldives50%
Mali110%
Morocco25-30%
Mozambique40%
Panama60%
Paraguay50%
Peru30%
Philippines50%
Qatar50%
Saudi Arabia80%
Turkey30%
United Arab Emirates80%
US25-30%
Uzbekistan30%
Venezuela30%
Zambia100%

I have skipped some countries in unstable regions such as Rwanda, Nigeria, Iraq, Afghanistan, Burundi, Mauritania, Sierra Leone, Chad, Ethiopia and Eritrea. Beware of that countries with very high population growth rates are more likely to become war zones than countries with modest growth rates.

The table above shows many less developed countries but also a few more stable rich countries such as Ireland, Canada, United Arab Emirates, Qatar, Australia/New Zealand. In particular countries with important natural resources are likely to do economically well, such as Australia, Bahrein, Bolivia, Canada, Kuwait, Qatar, Saudi Arabia and Venezuela. Places that are already densely populated might offer better returns than rural area's.