Many of the issues putting pressure on the real estate industry aren’t new, but this year’s trends show the rate and breadth of change are picking up as the sector navigates uncertainty. As one interviewee noted, “There has been change before. But now the pace of change is too fast to comprehend.” And as fast-paced technological and social change transforms how people live, work, play and learn, Canada’s real estate industry faces rising pressure to respond with new ideas. With the uncertainty dial being turned up, some are putting projects on hold and proceeding with caution rather than quickly moving forward. Others are managing risks by turning to more complex joint venture and partnering arrangements.
Are real estate leaders at risk of falling behind by standing still? Complacency is a dangerous mindset, so those who want to thrive are looking to be more creative with technology, investment strategies and how they deal with growing affordability concerns. As new technologies insert themselves into the real estate scene, rising expectations from consumers and tenants mean the industry needs to up its game.
For industry players, the challenge will be to rebalance their portfolios by considering different property types, redeveloping their assets and exploring new partnerships and regions. They’ll also need to reinvent how they do business by integrating data analytics and new technologies, such as virtual reality and drones, into their properties and business models and considering the evolving implications of the sharing economy. And on the issue of affordability, it’s time to rethink by moving beyond efforts to limit demand to address the supply part of the equation. Home buyers will need to reconsider how and where they live.
The industry remains cautiously optimistic about investment prospects for 2019, with multi-family housing and warehousing and fulfillment facilities cited by survey respondents as being particularly attractive in the coming year. And the shifting, uncertain environment presents many opportunities. On the demographic side, Canada’s aging population has opened up new business possibilities for developing housing options for seniors.
Despite the challenging environment for the retail sector, many landlords do have options, including providing for a greater mix of uses on their properties by introducing, in some cases, higher-density residential components and putting a greater focus on entertainment and attractions. Even the legalization of recreational cannabis creates new opportunities on both the retail and industrial sides of the real estate business.
For the real estate industry, the good news is that those that ramp up their partnerships, get the right skills on their teams and embrace the creativity necessary to accelerate their transformation will find themselves in a good position to take advantage of the shifting environment and continue to grow.
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