As the “Emerging Trends in Real Estate Report 2022” report by PwC US and the Urban Land Institute reveals a robust real estate market driven by a booming economy, the lack of affordable housing and the impact of climate change and inflation are a cause for concern.
In the 111-page report, the researchers concluded that how, why, and where people buy is forever changing and continuing to evolve. The research was conducted from a survey of nearly 1,700 real estate industry experts and explores “how the real estate industry has experienced an encouraging and unprecedented recovery from the COVID-19 pandemic,” PwC said in a report. communicated.
“The report highlights that the flexibility, convenience and ultimately resilience of real estate can drive the functioning of the real estate industry over the next decade,” PwC noted. “Consumer expectations for traditionally designed spaces have changed, and there is likely to be a massive shift in the functionality of homes, offices, shopping malls and healthcare spaces. “
PwC and ULI have said that housing markets, which were previously predictable, “are likely to remain in a bubble of uncertainty.” However, the survey found that confidence in decision-making has improved compared to last year’s report. “Three-quarters of those polled in the 2022 survey report felt confident in making these same long-term strategic decisions, compared to less than half in the 2021 survey,” PwC and ULI said in the statement. These decisions will likely include more bullish real estate investments.
“Real estate investing is a priority for institutional investors in traditional and alternative sectors, as risk remains low and rates remain attractive,” said the report’s authors. “Cityscapes are facing change as new land uses and updated zoning allow markets to evolve. “
Research has found that these market conditions “remain under the cloud of the climate emergency, prompting new ways to standardize and measure ESG requirements.” PwC and ULI said that as companies tackle “environmental, social and governance issues in the real estate industry, it will be imperative to take a holistic approach and create a strong overall strategy – to help create an advantage and lasting value ”.
“There is clearly optimism within the real estate sector for its outlook in 2022 and there is undeniably a weight of capital available for investment,” said Anita Kramer, senior vice president of the Center for Real Estate Economics and Capital ULI Markets. “Yet the terrain is changing and we are seeing long-term and lasting changes in a range of key areas, including the relative outlook for real estate sectors and locations, the extent to which we are utilizing various types of properties and our attitudes towards the role of industry in climate risk and decarbonisation.
Kramer said that emerging is “the opportunity to lay the groundwork for a new vision for our communities, a vision in which we reallocate obsolete buildings, reduce carbon emissions and create more affordable housing.” .
Byron Carlock, partner of PwC and leader in the real estate practice in the United States, said that “an abundance of capital to invest, low interest rates and continued demand for many types of products have created a positive environment. for our industry ”.
“However, all is not rosy and real estate still has its challenges,” Carlock said. “There are rising costs, pending tax reform and new infrastructure spending that could impact the labor market. There are also various social issues, which industry can play a leading role in helping to resolve. Some of these include affordable housing, ESG-focused urban planning, and neighborhood inclusion. “
Regarding retail, the report’s authors said changes in the retail industry “are not yet complete.”
“Retailers will need to continue to adapt to meet consumers where they want to be,” the report says. “Big chains are investing heavily in upgrading every aspect of their e-commerce infrastructure, from the way products are marketed on their websites to how items are delivered to customers. “
The report noted that shopping centers must continue to evolve. “Temporary outdoor meals will become a permanent feature,” the report says. “And people are going to continue to shop for the groceries and other items they buy online, so retail centers need to provide more space for pickup.”
The researchers concluded that “retail will never be the same again.”