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CRE reveal the 10 biggest issues affecting real estate
CRE reveal the 10 biggest issues affecting real estate
14 July 2017
The Counselors of Real Estate (CRE) recently released a list of their top 10 issues affecting real estate in 2017-18.
The list was compiled by over 1,000 CRE members from around the world, who undertook extensive research and collaborative dialogue on current issues and trends. An extensive report was put together from this research, highlighting the key points of each issue.
The top 10 issues affecting real estate include:
1. Political polarisation and global uncertainty
According to CRE, these factors are impacting decision-making at every level of government and throughout the business community.
“On an international level, recent elections in the US, France, Austria, the UK and other countries point to resurging nationalism, testing existing diplomatic and trade relationships around the globe as exemplified by Brexit and NATO.
“Negative implications on real estate are immediate. Uncertainty about changes to trade, travel and immigration policy threaten cross-border investing, hospitality properties, retail, and manufacturing supply chains, among other effects,” stated CRE.
2. The technology boom
The report found rapidly developing technology and new innovations are changing the way real estate is being operated, with robotic learning, automated vehicles and online retail on the rise.
“You won’t need as much parking or retail, and anything that can be shared will be.
“Homes with features that take advantage of these trends (secure package drop-off and access to bandwidth) will also draw more attention in the marketplace,” stated CRE.
3. Generational disruption
The report noted the differing views of ‘Baby Boomers’ and ‘Millennials’ about where they want to live, work and play will increasingly impact the property markets in the near future.
“Real estate developers, investors, owners and builders will need to understand not only the location preferences of each group, but the design and amenity features of housing units, whether rental or owner occupied. One size will not fit all and supply will need to match rapidly changing demand,” stated CRE.
4. Retail disruption
“The trend toward transforming retail into ‘experiences’ continues to develop, and is offsetting shrinkage in the physical ‘bricks and mortar’ consumer goods platform. ‘Experiential’ retail drives customer traffic to a more diverse and highly participatory environment targeted to a variety of age groups and interests,” stated CRE.
The report also notes as retailers refine their practices, the retail market will survive and even prosper.
5. Infrastructure investment
According to the report, the need for infrastructure investment is critical.
“The movement of goods, which involves everything from ports to airports to warehouses to roads, highways and railroads, is further straining an aging and highly vulnerable interior framework. Add to this the need for pipelines, electricity transmission, and water distribution, and the immediacy of infrastructure needs becomes even more pronounced,” stated CRE.
6. Housing: the big mismatch
The report states a lack of housing stock has generated a spike in home prices, resulting in a decline in affordability for many home buyers, particularly those in lower income sectors. This has caused a disparity between housing needs and housing supply worldwide.
The report also discusses the issues surrounding housing disparity in locations with significant job growth, as well as the challenges faced by property seekers looking to upgrade or downsize in metropolitan hubs.
7. Lost decades of the middle class
In relation to the residential housing market, the report noted rising costs of living and student debt levels suggested homeownership would be postponed by younger generations.
“Rentals will not necessarily benefit in the most expensive, desirable urban locations; supply growth in multifamily housing counterbalances demand, and stagnant income levels constrain rent growth,” stated CRE.
8. Real estate’s emerging role in health care
The report uncovered an increasing demand for ‘healthy buildings’, where homes are designed, constructed and operated in ways that promote a healthy lifestyle.
“It makes intuitive sense that buildings could help or hurt health in that people spend 90 per cent of their time indoors. Research from the Mayo Clinic also concludes that only 20 per cent of health comes from health care, with environmental and behavioural factors accounting for 40 per cent,” stated CRE.
“New immigrants tend to rent, boosting demand for multifamily housing, especially in gateway cities. Recent surveys suggest that immigrant populations aspire to own homes and to move relatively freely from cities to suburbs and back in the search for employment,” stated CRE.
For countries such as the US, the report notes that limiting immigration could constrain labour mobility and homeownership rates.
10. Climate change
In terms of climate change, the report primarily focuses on the impact rising sea levels have on the real estate market. “The implications of potential sea level rise and related flooding on real estate values is positioned to explode due to dramatic increases in the volume and accessibility of information on the consequences of sea rise,” stated CRE.
The report further notes the values of all properties will be affected if airports, transportation infrastructure and other community amenities are negatively impacted. “Commercial properties and local economies in coastal regions will suffer if tenants concerned about community resilience or related tax consequences go elsewhere,” stated the CRE.
For more information about the issues affecting real estate, read
CRE's full report
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