Are Urban Growth And Innovation The Future Catalysts Of Global Real Estate?
For the first time in history, more than half of the world population, 3.3 billion are living in global cities.
The world’s population is becoming more and more urban. The urbanization phenomenon is spreading globally as people increasingly become attracted to modern cities and their revolutionary advances in technology and innovation. The real estate industry is an integral part of this process since in the past decade has experienced a transformation in both how business is transacted and conducted. Thus, it is fair to say that urbanization and innovation are shaping global real estate.
Even though the fascination for living in major global cities is not historically rare, the percentage of urban growth is. It was in 2008 when the world reached an invisible but momentous milestone. For the first time in history, more than half of its human population, 3.3 billion people, were living in urban areas, according to the United Nations Population Fund report “State of World Population 2007”. Furthermore, the projection is even more stunning since urban growth is expected to reach 66 percent by 2050.
With the trend toward urbanization, many opportunities but also challenges arise in the real estate industry. The biggest question mark is, without a doubt, how to meet the increasingly rapid demand for housing in these big cities. Of course, none of this is new. Cities have been always crowded, housing has always been a major issue, and real estate has never failed because of this. Fast urban growth is the variable that can become a big challenge for developers, brokers and landlords globally.
Fortunately, technology and innovation have played an important role. They are enablers and catalysts for business, cultural and social change. It can arguably be said that both will have a major impact on the real estate sector in years to come. This includes the issue of transparency and better access for people. It is already changing, from the way we search for a property, buy, sell, lease and value real estate properties and information.
For example, in Europe, the PWC Global Report states that the real estate industry is experiencing a seismic shift in its center of gravity – from real estate as a financial asset, to real estate as a product and more significantly, to real estate as a service. Digital technology will invigorate the availability of the data, change the way we use buildings and improve the way we use big data – leading to better assets and property management.
Developing countries like Vietnam, Indonesia, Malaysia, and their main cities accordingly, are also part of this urban trend that is reshaping residential real estate. Although this is more from the built environment practice, the evolution of it is steadily happening. Albert Saiz, director of the MIT Center for Real Estate (CRE) comments, “Because we have to house so many new people worldwide, especially at the low end, a lot of the advancements are going to be geared toward producing housing typologies that are cheap, versatile, and customizable.”
The future of global real estate will be dictated by urban growth, but it will also be led by technology and innovation. The ways in which technology and innovation will be used by real estate companies will directly impact the market and the consumers. Balancing the rise in demand for housing in urban city centers with access to accurate information will be the true test for the real estate sector in the years to come.