By 2036, its estimated invested stock of $5 trillion will dwarf the UK's $2 trillion and Japan's $1.26 trillion. At present, China ranks fourth with $465 billion trailing behind Japan with $682 billion and the UK with $744 billion.

Based on current forecasts for GDP and GDP per capita, the global value of investable real estate stock is expected to grow by 63% over the next decade, or by 4.6% per year, to a total value of approximately $45 trillion in '26. “Such figures are undoubtedly useful for global real estate investors, as they allow an assessment of investment potential that guides business planning and portfolio construction over time,” according to the PGIM Real Estate report. “However, investable stock does not tell the whole story about what investors can acquire in today's market. In fact, there can be a large difference between the amount of investable stock in a country and the size of its investment market.

“Arguably, then, it is the size of invested stock that matters most for investment decision making, particularly in the short term,” the report states. “For investors seeking to build global real estate portfolios, relying solely on investable stock could lead to misallocations by sector and geography, thus impacting returns performance.”

Using MSCI/IPD's latest published estimates of the size of 32 major country investment markets and comparing them to PGIM Real Estate's broader estimates of investable stock, the researchers find that invested stock is set to grow faster than investable stock over the next 20 years. “It is striking that just 30% of the high quality, institutional grade stock across these 32 countries is currently traded in investment markets, although the ratio varies around the world,” according to the report. “In the United States, approximately 33% of the investable stock is traded, while in China it is just 16%. In contrast, in Switzerland 68% of stock is traded, while in Hong Kong it is close to 100%.”

MADISON, NJ—In 10 years, the world's second largest real estate investment market will be a nation that's currently well behind the top three. Ten years later, that nation will far surpass the countries now ranked second and third for investable real estate stock.

In a new report from PGIM Real Estate, researchers write, “By 2026, we estimate that China's stock will have grown by $5.0 trillion, reaching a total of $7.7 trillion—nearly three times its current value. Alone, it is set to contribute almost 30% to the increase in global stock. “

By comparison, the value of stock in the US is set to grow by $3.7 trillion during that time period. “In 2026, we anticipate that China and the United States combined will account for nearly half of the world's investable real estate stock by value,” according to PGIM Real Estate.

At the present rate of growth, it's not a question of China surpassing the US in the foreseeable future. “The United States will continue to dominate the invested real estate market,” with its invested stock increasing from $2.67 trillion as of 2016 to $4.33 trillion in '26 and $6.73 trillion a decade later, write the PGIM Real Estate researchers, led by Peter Hayes, managing director and global head of investment research. “However, by 2026, we estimate that China's invested stock will reach $1.8 trillion, surpassing Japan and the United Kingdom to become the world's second largest investment market.”

By 2036, its estimated invested stock of $5 trillion will dwarf the UK's $2 trillion and Japan's $1.26 trillion. At present, China ranks fourth with $465 billion trailing behind Japan with $682 billion and the UK with $744 billion.

Based on current forecasts for GDP and GDP per capita, the global value of investable real estate stock is expected to grow by 63% over the next decade, or by 4.6% per year, to a total value of approximately $45 trillion in '26. “Such figures are undoubtedly useful for global real estate investors, as they allow an assessment of investment potential that guides business planning and portfolio construction over time,” according to the PGIM Real Estate report. “However, investable stock does not tell the whole story about what investors can acquire in today's market. In fact, there can be a large difference between the amount of investable stock in a country and the size of its investment market.

“Arguably, then, it is the size of invested stock that matters most for investment decision making, particularly in the short term,” the report states. “For investors seeking to build global real estate portfolios, relying solely on investable stock could lead to misallocations by sector and geography, thus impacting returns performance.”

Using MSCI/IPD's latest published estimates of the size of 32 major country investment markets and comparing them to PGIM Real Estate's broader estimates of investable stock, the researchers find that invested stock is set to grow faster than investable stock over the next 20 years. “It is striking that just 30% of the high quality, institutional grade stock across these 32 countries is currently traded in investment markets, although the ratio varies around the world,” according to the report. “In the United States, approximately 33% of the investable stock is traded, while in China it is just 16%. In contrast, in Switzerland 68% of stock is traded, while in Hong Kong it is close to 100%.”