PwC Anticipates Total Investable Real Estate in the U.S. and Canada to Rise by
38 Percent to $11 Trillion by 2020
NEW YORK, February 27, 2014 - Rapid urbanization and demographic changes, especially within emerging markets, is anticipated to lead to substantial growth in the real estate investment industry over the next six years, according to Real Estate 2020: Building the future, a new report from PwC. 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 is expected to 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 and will play out across housing, commercial real estate and infrastructure.
The report also finds that private capital is expected to play a critical role in funding the growing and changing need for real estate and its supporting infrastructure.
Intense competition for prime real estate will likely cause real estate managers and investors to seek out new opportunities for yield. Yet 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 real estate industry is currently undergoing fundamental changes today that we expect will significantly reshape the landscape in 2020,” said Byron Carlock, U.S. real estate practice leader, PwC. “And with $40-50 trillion of infrastructure investment forecasted, there will be significant new real estate opportunities, especially for urban density housing and transit-oriented development – and urban high street retail. Real estate managers and investors need the vision to anticipate emerging trends in the medium-term and prepare for them now in order to be successful in 2020.”
Other changes in real estate by 2020 will include:
Real estate managers will need to respond and adapt…
Real estate managers should think more globally as global investable real estate will expand substantially, especially in emerging economies.
“Demographic shifts will affect demand for real estate fundamentally in 2020 with the aging Baby Boomers creating an increase in demand for specialist types of real estate like senior and intergenerational housing, while there will be a rise in micro-units for the younger population,” said Mitch Roschelle, partner, U.S. real estate advisory practice leader, PwC. “As the real estate industry and environment evolves, there are certain risks that market participants should be aware of so they can navigate those challenges thoughtfully, while also being able to jump on the increasing amount of opportunities in the space. This is how we help our clients at PwC – and we’re working with them now so they will be fully prepared in 2020 and beyond.”
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To download a copy of Real Estate 2020, please visit www.pwc.com/re2020.
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DISCLAIMER: This paper makes a number of predictions and presents PwC’s vision of the future environment for the real estate industry. These predictions are, of course, just that – predictions. These predictions of the future environment for the real estate industry address matters that are, to different degrees, uncertain and may turn out to be materially different than as expressed in this paper. The information provided in this paper is not legal, investment or and other professional advice. If any reader requires legal advice or other professional assistance, each such reader should consult his or her own advisors and discuss the specific facts and circumstances that apply to the reader