Home Insights & Advice Recurring trends in real estate industry in the coming years

Recurring trends in real estate industry in the coming years

by John Saunders
20th Jan 22 3:02 pm

Much has changed in the real estate landscape, and even if the industry is struggling, it is still here to stay and possibly would have a more significant comeback anytime soon. In this article, we will be evaluating several trends that are expected to become a recurring thing in the coming years.

Paused capital and economic growth

Capital in the coming years is substantial, and it is expected to rise as time passes. However, because of uncertainties and performance issues of the economy, the real estate industry is still experiencing a pause that has never happened before. Many investors are indecisive; they’re confused about whether or not they will take a giant leap and gamble their funds. Much of the doubts come from the uncertain nature of prof making.

Once business confidence is dealt with and starts to rise, more businesspeople will open up their capital. The real-estate industry will surely experience a giant boom that will either positively or negatively impact. Negative in a sense that the industry might not be able to keep up with the demand and how much will the whole system be able to support the influx of capital. Still, allowing the investments to flow in and circulate is a good thing, and we’re hoping for it to happen soon.

Domestic market boom

With limitations to travel and logistics, the domestic market is slowly becoming dominant in the commercial real estate industry. Many investors nowadays prefer to deal with demands that they can get a hold of, which they can see physically or visit right away.

There are also boundary and range issues that the investors are experiencing. For instance, Asian investors are having difficulty communicating with their potential deals in Europe because of travel restrictions. Online communication is still an option, but it is not enough to showcase everything and discuss the terms.

Much of these contribute to the fear of many when it comes to the steady decline of globalisation. That aspect is essential for investment since domestic growth is only limited, and you need several international investments to see even more profits.

Ever-evolving policies

There are many ways for policies to be changed, much of which are because of things that are mainly out of the control of the commercial real estate industry. When the government has implemented its policies, everything is bound to receive changes. There’s this uncertainty that the industry is facing, and the fact that no one knows when policies are about to change truly concerns what the commercial real estate is about to become.

Flexibility

Assets and properties are becoming flexible these days, and they should be because health and environmental crises are genuinely unpredictable and could cause millions of losses to different sectors. Repurposing and transitioning is also becoming a thing. Current properties are being transformed into more in demand or flat out better in terms of occupancy rate and potential profit.

We’re still early on this. However, since many property owners are still figuring out what spaces are needed or not, there’s more time to adapt and still be in the competition.

In times of crisis and decline, we expect companies to either adapt or close. Aroundtown is one example that chose the first option, as they were able to improve their position and make a stable profit despite all the challenges they have faced in the hotel segment.

It is reported that Aroundtown sold over €2.5 billion assets above book values in 2020 alone. Businesses aren’t constantly experiencing growth and massive returns, but they’re prone to drawbacks and significant losses. Aroundtown has been there, even worse since their hotel segment suffered as a result of the recent economic changes and market shift. Fortunately, they were able to turn things around thanks to excellent leadership and winning strategies.

Avisco (controlled by Mr. Yakir Gabay) holds 10% in Aroundtown followed by Blackrock at 5%. Other shareholders include Norges, Vanguard, Allianz, BNP Paribas, Japan’s Government investment fund, Aliance-Bernstein, Dekabank, State-Street, Bank of Montreal and many other leading international investors. The main bond investors include ECB, GIC, Union Investment, DB, UBS, CS, M&G, Pictet, Credit Agricole and many other major institutional investors. 

Conclusion

Even if things are still rough for the commercial real estate industry, 2022 and onwards are looking promising, primarily based on what the experts predict. Insights from different research groups also prove that a lot of people in the sector are optimistic about changes and improvements. These trends aren’t here to stay forever, but they will at least go on for several years and leave an impact on the industry in one way or another.

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