The Code Solution is pleased to feature another guest post from our friends at The Llenrock Group. The following post was originally published on Llenrock Blog.
With 2016 coming to an end, it’s time to start looking at what the future of real estate holds. Thankfully, PWC has done a lot of the work for us. In a recent report, PWC detailed what can be expected in the real estate market of 2020, with our own spin of course!
1. Cities continue to grow
By the year 2020, it is expected that cities all over the glove will be swelling. By 2030, there will be 661 metro areas with populations over 1 million and by 2050, seven out of 10 people will be living in urban areas. This wave of urbanization has been dubbed New Urbanism, meeting the needs of inhabitants such as walkability, connectedness and natural/organic feel. It has lead to shared space (co-working AND co-living) and is having a positive impact on mixed-use properties. Fast-growing countries in Asia, Africa, the Middle East, and Latin America can expect to see the biggest growth. However, while many cities will experience growth, not all of them will prosper. The growth in some will help the cities become social hubs and generate economic growth; in other cities, growth has the potential to destroy wealth with poor infrastructure, slums, and rampant crime.
2. Technology continues to disrupt
Technology has been slowly making a larger appearance in the real estate world. In 2020, the majority of consumers will be made up of those who were raised in the digital world, making it increasingly more important for companies to get themselves online and on social media fronts. In an article from inman.com, Director of Marketing at Charlesgate RealtyGregory Kiep highlighted the fact that 3-D technology will be in full swing by the time 2020 rolls around; “With more accessible pricing on 3-D technology, these walk-throughs will replace tours that don’t allow potential buyers to ‘see’ into the home”. It’s about time we embrace technology via big data, intelligent buildings and simply to meet consumer needs.
3. Sustainability to change design
Because of their locations and populations, cities tend to be the most vulnerable when it comes to the effects of climate change. Cities contribute about 70% of greenhouse gas emissions, while they only take up 2% of land in the world. Because of these shocking numbers, cities and developers are making more moves to become more sustainable. Developers have already started to integrate sustainability criteria into main office buildings, new cities, and individual homes. Another big factor in the increased desire for sustainability is tenants’ desires to live in a more eco-friendly society. As time goes by, the effects of climate change are becoming more apparent, and generations of people, namely millennials, are preparing to take more steps to save the planet.
4. New risks to emerge
With new cutting edge technology aimed towards creating a greener planet, developers have been making larger attempts to work them into communities. While this is happening, buildings that do not live up to a greener standard are predicted to have shorter operational lives. To make these green changes happen however, there will be a stronger need for real estate capital to work more closely with both the central and local governments. The government will be needed to aid in projects, and developers will also need to have an understanding on what cities and towns are looking for in new structures.
5. Private capital investment to increase
Over the past few years, the demand for private capital real estate has blown up, and it doesn’t show signs of stopping. Because of regulations, we have seen banks being less active in the CRE space. With the ever-decreasing size of the middle class, urban real estate has become more and more desirable, leading to new construction and more capital.
6. More public-private partnerships
It can be expected that developers will become more involved with local projects, such as local infrastructure and transportation. Again, it will be important for developers to have close relationships with the government and to form a relationship in which they can even start to advise and influence them on what is best for the city or town’s structure.