TRENDS CAN REFORM THE REAL STATE SECTOR IN 2020

 

Trends in real estate are complex by virtue of their existence. While they usually outlast business cycles, they can also shift in a single cycle several times. 2019 was marked by muted global economic growth, market instability, geopolitical problems and trade standoffs, which in the light of their real estate life cycles, influenced the real estate economics of locations-cities, countries and continents. The macroeconomic outlook seems optimistic going into 2020, and the Dubai Investment Real Estate looks set to play a central role in the broader financial ecosystem. Here are seven developments in real estate in 2020 to look for.

High risk, high compensation in fast-growing towns

In light of disruptions, the emergence of new value drivers and rapid social change, analysts expect a broad risk-return continuum this year. This trend is particularly exacerbated in fast-growing cities, where it is anticipated that migration from rural areas and satellite cities, as well as internal migration, would drive developments that could generate high rewards. This however, often includes a large range of threats, from climate change to consumer behaviour and much more. In a late-cycle, low-yield climate, investors, amid short-term political risks and regulatory roadblocks, view a sound demand-supply balance as an opportunity. Though oil prices are a problem for the Middle Eastern markets, the economic downturn is likely to quiet the Asian markets.

Increasing global investments in capital

In real estate and its related verticals, PwC expects private capital to play a critical role in financing rising and evolving needs.According to the company, from US$29 trillion in 2012 to US$45.3 trillion in 2020, the global stock of institutional-grade real estate will grow by more than 55 percent. At the same time, a lull in global economic growth has led short-term rates to be lowered by central banks around the world. Such positive financial action would stimulate investors based on profits. Since 2018, investment in sales assets has eclipsed other categories, and will continue on the same trend in 2020.

Sustainability and technology

Despite consuming a mere 2% of the ground, cities are responsible for 70% of the world's energy-related carbon emissions. If the current circumstances remain, there will be 200 million environmental refugees around the world by 2050. With developers working towards reducing their carbon footprint and supporting net-zero energy ventures, Knight Frank expects climate action to affect the prime residential market in 2020. All in all, the target for existing buildings in 2020 is to obtain a favourable 'sustainability ranking' while new buildings will from the outset have to follow these criteria. In order to achieve these sustainability goals, technology is emerging as the most viable alternative and as a result, Proptech is likely to continue generating significant interest and investment in 2020, as it has consistently done in recent years.

Demographics of The

Seventy-three percent of millennials are willing to pay extra for sustainable goods, according to Nielsen report. In addition, millennials, with their numbers, rising incomes and an age historically associated with the buying of land, are influencing the course of the overall Off Plan Properties in Dubai. 45 percent of home buyers in the United States were millennials, while Generation X and baby boomers accounted for 37 percent and 17 percent respectively.It is worth noting that the pattern of millennial home buying is not widespread around the population. Owing to affordability issues, high mortgage rates and the need for versatility, some appear to favour renting over ownership. Regardless of purchasing or owning, because of their sheer numbers, in 2020, millennials will have a profound effect on all markets.