Influenced by a multitude of factors and operating in regular cycles, the real estate sector has always been one of the most dynamic, but in recent years the changes have become progressively dramatic with the next decade poised for an even more significant transformation.
Two decades ago, the way to recognise agents’ success and the service given to customers was through being an experts in their local market.
Nowadays the simple understanding of your own market is no longer enough; it is also essential to be on par with current and emerging and ever-changing global trends in order to maintain the advantage of an increasingly competitive market.
Hence we believe that the key global trends that real estate professionals need to know to stay on top are:
1. Urban sprawl and growth of second-tier cities
Growth of existing cities is likely to be more prevalent in emerging economies, notably Asia, Africa, the Middle East and Latin America.
In developed economies, we will see significant growth in medium sized or second-tier cities, as the continued increase in prices in the top-tier cities forces more people to seek better value for themselves.
2. Changes in government policies and economic growth
Government policy and economic growth are key factors, but its local implementation has been especially significant in recent years, with a number of proposals for changing policies related to the environment and economic change and slowdown around it.
Notable changes to property tax laws are also included in this section.
While we have little control over political and economic decisions, an in-depth understanding of them will allow us to plan a better strategy to protect ourselves and our customers.
3. Demographic change
With life expectancy now higher than ever, the overall share of people over 60 is expected to exceed that of people under 15 by 2050.
They are also more active at this age than previous generations and consequently will have very different property requirements, which will have a remarkable impact on industry, especially in more developed countries.
4. Millennial market share
Home buying by the millennial generation is expected to peak next year, then this generation will represent the largest market share for the next decade.
Not only will their first home aspirations boost prices for single-family homes in many markets, but their unique lifestyle needs will continue to change many aspects of the real estate industry.
5. Alternative life
Cohabitation, especially in the most expensive cities, is increasing.
This is also becoming more common in the workplace, with a report published by WeWork in October last year revealing that in London co-working is rapidly becoming an established trend, with 17% of offices now on a flexible basis.
6. New technologies
It has been known for some years that smart home technology is considered the "next most important thing", it is already common both in renovations and new constructions, that many homes are already managed by Alexa or Siri.
The new watchword over the next decade is expected to be "affordable homes" and both property developers and investors will be forced to consider the growing smart home robotics industry, which includes features and appliances such as vacuum cleaners and mobile assistant robots.
7. Green is still the new green
Sustainability is becoming increasingly challenging and this is unlikely to change given the projection that by 2050 the world will need 50% more energy, 40% more water and 35% more food to sustain the growing population.
It is therefore imperative that the design of all new properties is based on "green" or ecological principles, including renewable energy technologies and waste reduction.
We summarize thus that real estate was already subject to an expansive number of external influences such as interest rates, house prices and other economic trends. Now having to take into account a varied number of new emerging trends may seem scary, but it shouldn't be.
This is a challenge for all of us who work in this business, and it only scares those who are not interested in the need of their client.
But as the Greek philosopher Socrates has said; 'The secret of change is to focus all your energy, not on the fight against the old, but on building the new.'"
Text: Paulo Lopes
Picture: Quinn Kampschroer by Pixabay