Although the real estate industry has changed significantly over the past two decades, there are a number of noteworthy and influential trends emerging which are set to transform lifestyles and the property market.
Despite the industry always having been volatile, influenced by a range of competing factors and operating cyclically, real estate is set to experience even more significant changes over the next decade.
Yael Geffen, CEO of Sotheby’s International Realty, explains: “Twenty years ago, the top estate agents served their clients best by being experts in local markets. Nowadays, a thorough knowledge of the local market is not sufficient.
It is essential to be conversant with fast-changing contemporary and emerging trends in order to keep abreast of an increasingly competitive market.” In Geffen’s opinion, property professionals should take note of the key global trends:
As life expectancy increases relentlessly, it has been predicted that by 2050 for the first time the global percentage of people over 60 will be greater than that of youngsters under 15.
Not only are people living longer but they are also fitter and more active than previous generations and have, consequently, different property requirements for their retirement which will have important repercussions for the real estate industry.
Many expect to continue their independent lifestyles well into retirement and when they do sell the family home, tend to move to multi-generational communities, especially ones with amenities and healthcare facilities which are easily accessible.
There is also an expanding middle-class worldwide and it has been estimated that by the end of 2020 the world’s population of middle- class consumers will have increased by one billion.
Millennial market share
Millennial home-buying is expected to peak in 2020, with this generation representing the largest share of the market for the next decade. These would-be first time property buyers will cause prices of single-family homes to increase across many markets and their lifestyle requirements will continue to influence multiple aspects of the property market.
The boundaries between living, working and leisure are becoming increasingly blurred as is clearly demonstrated by the growing occurrence of ‘hipsturbia’, mixed-use suburban communities located near major cities.
Co-living, especially in and near the most expensive metropolitan areas, is gaining in popularity. This type of home is favoured by millennials and by older people whose accommodation and healthcare costs are rising.
The trend is also becoming more common in the workplace, as a report by WeWork in October 2018 revealed that co-working in London is set to become an established trend with 17% of office space now let on a flexible basis.
Despite smart home technology being regarded for some years as the ‘next big thing’, it now features increasingly in both new-builds and refurbishments, and many homes are already run by Alexa or Siri.
The new mantra over the next decade is likely to be ‘accessible homes’ and developers and investors will be obliged to acknowledge the burgeoning smart home robotics sector which includes appliances such as vacuum cleaners and mobile assistant robots.
These home helps will require as much open plan living space as possible with few stairs and smooth floor finishes.
In the real estate industry, technology will continue to change the way business is done. A recent study by KPMG found that awareness of the impact of technology on the real estate sector has increased but has further to go.
Green will still be green
Sustainability becomes ever more of a challenge and is unlikely to change in view of the projection that by 2050, the world will require 50% more energy, 40% more water and 35% more food to support the growing population.
This means that the design of all new properties will have to incorporate ‘green’ or eco-friendly principles, including renewable energy technologies and waste reduction.
Geffen concludes that while real estate is already subject to a growing number of issues such as interest rates, house prices and other economic trends, having to consider yet more factors may seem formidable. But the secret of managing change, she believes, is to focus all energy on building the new, not fighting the old.