Real estate

Real estate is at an inflection point. Urbanisation, the infrastructure gap, asset price inflation and shareholder activism mean that it’s moving centre stage. When governments plan economic development and companies set strategy, real estate is higher up the agenda than ever before. Real estate is no longer just an investment issue – it’s a strategic topic for governments and companies alike.

Why now? Firstly, urbanisation and infrastructure construction are spurring economic growth, especially in the developing world, making private sector real estate and infrastructure development critically important. Just consider, for instance, that in 2014 Malaysia’s population was 74% urbanised, up from 50% in 1990, adding 13 million urbanites; and that Thailand’s urban population rose to 48% from 29% over the same period 1. Public sector coffers in developing countries cannot finance the housing, roads, utilities etc. needed as people move to cities in search of better lives. Secondly, the value of real estate has surged at a time when shareholders are scrutinising how companies deploy their capital. Boards have to decide whether shareholders’ funds are best deployed in expensive real estate or their core businesses. Shareholder activists in the US, and to a lesser extent Europe, are forcing companies to focus on why they hold real estate, encouraging them to sell it and lease it back if there’s no convincing reason.

Our Real Estate 2020 paper envisaged world population growth driving a 55% increase in investable real estate from 2012 to 2020, with much of this expansion in emerging markets. Two further PwC papers – Cities of Opportunity and Building Better Cities – illustrate how economic growth is now centred on cities, which are competing to be great places to live as well as centres of commercial prosperity. Yet for this to happen they must plug an infrastructure funding gap that the World Bank estimates is more than US$1 trillion a year in emerging markets and developing economies.

This issue of Asset Management Insights showcases extracts from our recent thought leadership reports exploring the changing role of real estate. They showcase the views of our real estate specialists around the world. If you want more detail, we’ve included some links to the original reports.

We hope you find these articles thought-provoking and helpful. Please don’t hesitate to get in touch if you would like to speak to me, or any of my colleagues in our network, about any of the featured topics.

Articles in this edition 

• Cities of opportunity
• Building better cities
• Real estate monetisation strategies: Emerging trends
• Real Estate 2020: Building the future
• Real estate strategy and real assets
• Emerging Trends in Real Estate® The global outlook for 2016
• Planning for the future: The integration of organisational and real estate strategies, and the impact on investors