Rapid urbanisation and demographic changes, especially within emerging markets, will lead to substantial growth in the real estate investment industry over the next six years, as explained in our newly released report: Real Estate 2020: Building the future. At the same time as the industry's opportunities grow, so too will assets invested into the sector.
The report anticipates that the global stock of investable real estate will rise by more than 55 percent to around $45.3 trillion by 2020, from a 2012 total of $29.0 trillion, and will expand again by a similar proportion by 2030. The expansion will be greatest in emerging economies, where economic development should lead to better tenant quality and, in some countries, clearer property rights. It will play out across housing, commercial real estate and infrastructure.
Private capital is expected to play a critical role in funding the growing and changing need for real estate and its supporting infrastructure. At the same time, intense competition for prime real estate is likely to cause real estate managers and investors to seek out new opportunities for yield. As they venture into new territories, the growing and changing real estate world will present them with a far wider range of risks, which they should be equipped to manage.
The following mega trends are likely to have significant implications for real estate asset managers and investors.
In order to prepare for the opportunities and challenges that will be evident by 2020, real estate managers and investors will need to adapt early in the following ways:
In order to prosper in real estate’s new world, leading industry players, such as managers, developers and the investment community need to make sure they have the right capabilities and qualities, especially in the four areas of: a global network with local knowledge, specialist expertise and innovation, cost management and scale, and the right people. By understanding the economic and demographic shifts that will change the real estate investment landscape, they can be fully prepared for the challenges and opportunities of 2020 and beyond.