The Counsellors of real estate an international consortium that provides advice on real property has published the 2018-19 Top 10 issues affecting global real estate with a particular focus on commercial and residential property. The group classified the challenges into current and long-term issues.
Topping the current issues list is the cost of money, that is, interest rates and the economy. Commercial and residential real estate markets are experiencing decreasing demand and higher home mortgage rates respectively as interest rates rise. Increasing interest rates have also limited value appreciation for commercial real estate and made housing less affordable.
Politics and political uncertainty was a close second on the list. This points to how tax reforms and policies enacted to change the balance of trade between countries impacts jobs, incomes and property of all types, commercial and residential in local economies.
Another issue is the lack of housing affordability across nearly every income bracket with the exception of wealthy households.
Generational change and demographics is also emergent now more than ever before. For the first time in more than half a century, there are four distinct groups exerting influence on both commercial and residential real estate- aging Baby Boomers, Millennials, and the smaller groups on either side of Millennials (Generation X, now mostly middle-aged), and Generation Y, including students and those in their early 20s.
The continued expansion of e-commerce and logistics activities as a result of the growth in online shopping is also affecting the retail sector with pressure on providing convenience, selection and fast delivery times, while impacting warehousing and infrastructure with increased demand.
On the long-term view, infrastructure tops the list. This includes roads, bridges, airports, water and sewer lines, electricity, even public transit, all necessary to sustain and expand cities and communities. Continuous improvement in many places is needed to reverse deterioration.
Disruptive technology ranked second on the list of longer-term issues, this is inevitable as technology continues to affect every sector in every industry. Examples include advanced robotic applications in manufacturing and warehousing, big data for business decisions, smart building technologies and many others.
Also Read; Valuation of assets in the built environment
Nature too plays a big role in the long-term with natural disasters and climate change projected to result in property and environmental damage from events such as severe storms, wildfires, floods, earthquakes, volcanic activity, and rising sea levels. In addition, energy and water which are natural resources important for property and quality of life are threatened by environmental damage, by state and local regulations which complicate development.
Still on the watch list are four extra issues namely construction costs, urbanization/ suburbanization, tax cuts and leadership.