The real estate industry is changing and with it are the challenges for decision makers. Urbanization and internationalization, demographic changes and migratory movements, sustainability and energy transition, technology and digitization, internationalization and competition from new entrants are already having a significant impact on the real estate markets. But how will it continue and what are the trends for the future? What are reliable parameters that will have an impactin the future?
They are likely to increase the size of the available real estate pool and the resulting investment opportunities, but will change the nature of the investment and risks. Market participants must ensure that their strategic direction anticipates these developments early on, so as to be fit for the future.
Your success will increasingly depend on global networks, innovations, and above all valid information for your decision-making basis.
Global megatrends increasingly influence local real estate markets. This concerns social trends such as urbanization and internationalization, demographic changes and migration movements, but also technological progress and change, such as sustainability and the energy transition, technology and digitization.
Internationalization and competition from new entrants are already having a significant impact on the decision of players. Our global network of local experts is therefore a key success factor for our clients.
Real estate markets differ in their inherent characteristics such as geographic and sectoral sub-markets, low elasticity of adjustment and cyclical behavior depending on other investment areas. Due to location constraints, limited substitutability as well as uniqueness of the real estate property, many local markets show insufficient transparency. Therefore, one of the main challenges of the real estate industry is the information asymmetry of local markets. But by understanding the developments and trends early on, you will have the decisive investment advantage.
Property investments can be made in a variety of different direct or indirect asset classes. In the case of direct investments, macro and micro locations determine the possible uses of a property. In addition to classic asset types such as residential, commercial and industrial real estate, new asset classes such as student housing, nursing homes and Co-Working Spaces are increasing in importance. Indirect asset classes include open and closed funds, real estate AGs and REITs.
Over the course of digitization, profound changes should be expected and new trends are evolving. The long-term challenges of the real estate industry are driven by digitization, as in many industries. Young concepts such as "shared working" and "space-as-a-service“, or the use of data and analytics, are fueling the rise of new business models. The technologies with the biggest disruptive effects in the next 5 years are: firstly the Internet of Things (IoT), secondly Artificial Intelligence (AI) and thirdly Robotics. Proactivity and flexibility are prerequisites for change in companies.
The increasing momentum in the real estate industry is calling for more transparency and efficiency in the management of real estate assets in order to adopt to trends early
The transparency requirements in particular are being tightened by owners, users, authorities and lenders. Real estate companies must meet these requirements and adapt their planning, management concepts, organization, outsourcing, processes and systems, purchasing strategies and employees to these requirements in order to provide market-driven and competitive services. This requires coordinated strategies and suitable business models, often across borders.
Tax issues are relevant for the structuring of real estate investments as well as the execution of construction projects and project developments. Legal framework conditions and complex regulatory requirements must be taken into account nationally but also potentially at an international level.
Infrastructure and construction projects involve economic risks in all phases of project development. Construction work and the subsequent building management are complex processes, which are often performed inefficiently and uneconomically.
A careful analysis of the choice of location, the consideration of the potential and risks of the project as well as an optimal user requirement program are important for the successful implementation of a project. Economic, regulatory and technical issues mutually influence each other.
Our integrated approach combines engineering, technology, industry and financial expertise and keeps track of the entire lifecycle of an infrastructure or construction project.
The Real Estate Institute (REI) of PwC is a competence center at the interface between science and business.
We provide critical thinking, insight and analyses on current trends in the real estate industry. REI supports decision-makers in leadership positions in anticipating developments and shaping challenges, through primary and application research and scientific exchange. Our studies and reports reflect the insights of scientists and the practical experience of our consulting experts in the real estate industry. We include international accounting, tax and legal issues with competence in our work.
Real Estate Industry Leader, Partner, PwC Germany
Tel: +49 69 9585-5905