The commercial and residential real estate industry generated an estimated $3 trillion in 2014, with some 35% of sector revenue coming from leasing activities. Other revenue was attributed to net gains from property sales, brokerage fees and rental income. Most estimates of total global gross domestic product fall in the $75 trillion to $90 trillion range, meaning the real estate sector makes up between 3.33% and 4% of total world output.

Defining the Global Real Estate Sector

As an industry, real estate activity is defined as any economic transaction related to the purchase, sale, owner-operation or lease of property. This also includes income-generating residential properties, such as apartment buildings and single-room rentals.

Commercial companies are the largest global players in the sector. A commercial company might manage retail malls, own hotel chains or lease out restaurant spaces or hunting and fishing property.

Real estate services are included in the sector as well. Examples of real estate services include brokerages, property management, appraisers, investment property analysts and other consultants.

Impact on Global Economy

As far as production factors – land, labor and capital – are concerned, the real estate sector directly correlates to using land and generating rental income. There is little doubt that the efficacy of real estate markets significantly affects global economic output.

Proof of this can be seen in the financial crisis of 2007-2008. Two major industries were involved: real estate and finance/banking. Single-family home construction and mortgages became overleveraged and improperly valuated. When real estate prices declined, purchases and rents dried up, threatening much of the Western world with recession.

Even though total revenue from real estate transactions only accounts for 3% to 4% of total world output, it is likely that real estate's impact on the global economy is exponentially greater than that.

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