Globalization has significantly influenced numerous industries, and the real estate industry is no exception. As countries become more interconnected, the real estate sector has experienced profound changes in how properties are bought, sold, and valued.

In this article, we will explore The Impact of Globalization on Real Estate Markets, affecting everything from local market dynamics to the behavior of real estate agents and investors.

The interconnectedness brought by globalization has reshaped the industry, creating both opportunities and challenges that continue to evolve.

Foreign Investments and Their Impact on Local Markets

Foreign investments have become a crucial factor in real estate market dynamics. The increased flow of capital from foreign investors has led to significant changes in housing prices in various regions. For example, foreign investments in certain countries can lead to a rise in housing demand, subsequently affecting housing prices.

This phenomenon has been observed in several major cities worldwide, where foreign investors see opportunities for profitable investments, often leading to increased demand for residential and commercial properties.

However, the impact of foreign investments is only sometimes uniformly positive. In some regions, an influx of foreign capital can make housing unaffordable for residents, particularly in prime areas with high demand from global investors.

This creates a challenge for local markets as they strive to balance the benefits of foreign investment with the need to maintain affordability for local buyers. Local governments have had to implement various policies, such as taxes on foreign buyers or restrictions on certain purchases, to ensure that residents are kept in their communities.

In addition, foreign investments can also lead to the development of luxury properties that may not meet the needs of the local population. While high-end developments can contribute to economic growth, they only sometimes address the housing needs of middle-income or low-income residents, creating a mismatch in supply and demand within the local market. Real estate agents, developers, and policymakers need to work together to ensure that the benefits of foreign investment are shared more equitably among all stakeholders.

Access to Exclusive Global Property Listings

• International real estate agents often have private access to listings that are not available publicly online.

• They work through professional networks, off-market deals, and agency partnerships around the world.

• This gives investors a huge advantage, as they can find unique, high-potential properties before the general public sees them — often at better prices or with less competition.

Example: A luxury villa in Portugal might be available only through select international agencies — and not listed on popular websites like Zillow or Realtor.com.

Negotiation Advantages Across Different Legal Systems

• Each country has its own real estate laws, tax rules, and negotiation practices.

• International agents are trained to understand local laws and cultural norms when making property deals.

• They help structure offers legally and smartly, ensuring you avoid mistakes (like invalid contracts or tax traps).

• They also know how to negotiate better terms, like financing options, property inspections, or tax incentives, depending on the country.

Example: In France, the buying process is very different from the U.S. — you often need a notary involved. An experienced agent will guide you through it smoothly and might even save you money on transfer taxes.

The Most Important Factors for Real Estate Investing

What's the most important thing to look for in real estate? While location is always a key consideration, there are numerous other factors that help determine if an investment is right for you. Here's a look at some of the most important things to consider if you plan to invest in the real estate market.

1. Property Location

Why It's Important

The adage "location, location, location" is still king and continues to be the most important factor for profitability in real estate investing. Proximity to amenities, green space, scenic views, and the neighborhood's status factor prominently into residential property valuations. Closeness to markets, warehouses, transport hubs, freeways, and tax-exempt areas play an important role in commercial property valuations.

What to Look For

A key when considering property location is the mid-to-long-term view regarding how the area is expected to evolve over the investment period. For example, today’s peaceful open land at the back of a residential building could someday become a noisy manufacturing facility, diminishing its value. Thoroughly review the ownership and intended usage of the immediate areas where you plan to invest.

One way to collect information about the prospects of the vicinity of the property you are considering is to contact the town hall or other public agencies in charge of zoning and urban planning. This will give you access to the long-term area planning and make a determination of how favorable or unfavorable to your own plan for the property.

2. Valuation of the Property

Why It's Important

Property valuation is important for financing during the purchase, listing price, investment analysis, insurance, and taxation—they all depend on real estate valuation.

What to Look For

Commonly used real estate valuation methods include:

• Sales comparison approach: recent comparable sales of properties with similar characteristics—most common and suitable for both new and old properties
• Cost approach: the cost of the land and construction, minus depreciation— suitable for new construction
• Income approach: based on expected cash inflows—suitable for rentals

3. Investment Purpose and Investment Horizon

Why It's Important

Given the low liquidity and high-value investment in real estate, a lack of clarity on purpose may lead to unexpected results, including financial distress—especially if the investment is mortgaged.

What to Look For

Identify which of the following broad categories suits your purpose, and then plan accordingly:

• Buy and self-use. Here you will save on rent and have the benefit of self-utilization, while also getting value appreciation.
• Buy and lease. This offers regular income and long-term value appreciation. However, the temperament to be a landlord is needed to handle possible disputes and legal issues, manage tenants, repair work, etc.
• Buy and sell (short-term). This is generally for quick, small to medium profit—the typical property is under construction and sold at a profit on completion.
• Buy and sell (long-term). This is generally focused on large intrinsic value appreciation over a long period. This offers alternatives to compliment long-term goals, such as retirement.

4. Expected Cash Flows and Profit Opportunities

Why It's Important

Cash flow refers to how much money is left after expenses. Positive cash flow is key to a good rate of return on an investment property.

What to Look For

Develop projections for the following modes of profit and expenses:

• Expected cash flow from rental income (inflation favors landlords for rental income)
• Expected increase in intrinsic value due to long-term price appreciation.
• Benefits of depreciation (and available tax benefits)
• Cost-benefit analysis of renovation before sale to get a better price
• Cost-benefit analysis of mortgaged loans vs. value appreciation

5. Be Careful with Leverage

Why It's Important

Loans are convenient, but they may come at a big cost. The best terms are reserved for those with excellent credit. You commit your future income to get utility today at the cost of interest spread across many years. Be sure you understand how to handle loans of this nature and avoid high levels of debt or what they call over-leverage. Even experts in real estate are challenged by over-leverage in times of adverse market conditions and the liquidity shortages with high debt obligations can break real estate projects.

What to Look For

Depending upon your current and expected future earnings, consider the following:

• Decide on the type of mortgage that best fits your situation—fixed-rate, adjustable-rate mortgage (ARM), interest-only, zero down payment, etc. Note that each type of mortgage has its own risk profile and you need to study each carefully. For instance, ARM includes mortgage rates that can change at any time driven by capital market forces and the borrower must accept any rate changes during the loan term.
• Be aware of the terms, conditions, and other charges levied by the mortgage lender.
• Shop around to find lower interest rates and better terms.

6. New Construction vs. Existing Property

Why It's Important

New construction usually offers attractive pricing, the option to customize, and modern amenities. Risks include delays, increased costs, and the unknowns of a newly-developed neighborhood.

Existing properties offer convenience, faster access, established improvements (utilities, landscaping, etc.), and in many cases, lower costs.

What to Look For

Here are some key things to look for when deciding between a new construction or an existing property:

• Review past projects and research the construction company's reputation for new investments.
• Review property deeds, recent surveys, and appraisal reports for existing properties.
• Consider monthly maintenance costs, outstanding dues, and taxes. Costs such as these can severely impact your cash flow.
• When investing in leased property, find out if the property is rent-controlled, rent-stabilized, or free market. Is the lease about to expire? Are renewal options favorable to the tenant? Who owns the furnishings?
• Quality-check items (furniture, fixtures, and equipment) if these are to be included in the sale.

7. Indirect Investments in Real Estate

Why It's Important

Managing physical properties over a long-term horizon is not for everyone. Alternatives exist that allow you to invest in the real estate sector indirectly.

What to Look For

Consider other ways to invest in real estate:

• Real estate investment trusts (REITs)
• Real estate company stocks
• Real estate sector-focused mutual funds and ETFs
• Mortgage bonds
• Mortgage-backed securities (MBS)

8. Your Credit Score

Why It's Important

Your credit score affects your ability to qualify for a mortgage, and it impacts the terms your lender offers. If you have a higher credit score, you may get better terms—which can add up to substantial savings over time.