With increasing globalization, shifting demographics and advancing technologies, just to name a few, society is changing rapidly. These changes, as reflected by evolving tastes, preferences and needs, influence both how and where people live and work. As part of their joint publication, Emerging Trends in Real Estate 2019 (the Report), PwC and the Urban Land Institute forecast that in response to mounting pressure on the Canadian real estate industry (the Industry) to confront these changes, we may begin to see Industry players increasingly embrace both technology and creativity.
Smart technologies may help the Industry adapt to a changing market
One trend that the Report identifies for 2019 is the “intersection of technology and real estate”. Virtual and augmented reality and drones, for example, will allow builders and developers to provide clients with greater insight into pre-construction projects and to show on-site progress once construction is underway, respectively.
Technology may play an even more significant role behind the scenes. In particular, we may see enhanced reliance on data analytics whereby Industry players use these technologies to help analyze consumer patterns and inform their decisions of which categories of property to target and/or avoid and how best to revamp their current portfolios so as to stay relevant in an ever-evolving market.
Higher price tags and risk aversion may encourage the Industry to get creative
With the rising costs of real estate and fewer “good deals”, the Report also forecasts Industry players getting creative in their approaches to navigating this riskier environment. One such approach may involve fewer purchases and instead, greater redevelopment of existing properties. Take retail, for example. With the acceleration of e-commerce (and certain other factors), retail properties have been experiencing pronounced difficulties such that the traditional “urban mall” is an increasingly less sustainable business model.
However, these retail properties are prime targets for redevelopment. In fact, the Report cites a trend of landlords planning to convert their malls into mixed-use spaces that offer a combination of retail, residential and other amenities.
Another approach may involve strategic partnerships and joint ventures. Specifically, some developers and investors intent on diversifying their portfolios by purchasing properties in unfamiliar markets are partnering with others who have expertise in those markets so as to minimize the risks associated with such acquisitions. Further, some developers and investors may shift their focus altogether to Canadian cities and/or other countries where real estate is less expensive.
With the new year just around the corner, it will be interesting to see how Industry players employ technologies and what creative approaches they adopt in order to effectively respond to the changes confronting the Industry and any further changes that may arise.
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