Redefining Real Estate: Global Megatrends Impact
"Explore the evolution of Global Megatrends and their influence on real estate as discussed by Professor Amonn D'Arcy. Discover the shifts in economics, demographics, technology, cities, and climate change shaping the future of the real estate industry."
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Where business comes to life Redefining Real Estate The impact of Global Megatrends Professor amonn D Arcy Professor of International Real Estate
Agenda What are Global Megatrends? How are Global Megatrends Redefining Real Estate Some Thoughts on the Future 2
1. Global Megatrends A key feature of economic development over the past four decades has been the evolution of what have been commonly termed Global Megatrends as broad drivers of structural change which have impacted patterns of economic and social development on a global basis they have reshaped business sectors, driven innovation and triggered significant changes in corporate behaviour likewise, they have changed human behaviour as we all respond to the structural changes in economies and societies they have brought about 3
Internationalisation and Shifting Economic Power A long-standing global megatrend has been the internationalisation of economics activities both manufacturing and services Shifting economic power with the rise of China, India and Africa. China is now the world s second largest economy and India the fifth largest. In the second decade of this century six of the top ten growth economies in the world were in Africa. 4
Demographics and Technology Shifting demographics are a very important global megatrend ageing populations demographic groups reflecting age (Millennials, Gen Z), gender, occupation etc. key catalysts of change in the economy and society An omnipresent megatrend is technology, and we are beginning to see its very profound impacts on human behaviour both in consumption and production. We can examine any number of its manifestations such as AI (including generative AI), Blockchain, Digital Connectivity and of course the much-debated Metaverse. 5
Cities and Climate Change With over 60% of the world's population predicted to live in cities by 2030, inevitably a focus on the city as a key unit of economic and social development has been part of the megatrend discussion. the analysis of cities as talent clusters, as magnets for global capital, smart city hubs of technology and in some cases as global gateway cities. A further and some would suggest the most important global megatrend of the past decade has been the impact of climate change and resource scarcity. global action designed to save the planet increased focus on sustainability and concepts such as ESG (environmental social and governance) goals related to the achievement of carbon neutrality. 6
Being Ethical EDI A final and less tangible global megatrend has been a greater awareness about the need to promote ethical decision making and behaviours in the corporate world. a greater emphasis on corporate (social) responsibility a renewed focus on business and professional ethics promotion of gender and racial equality workplaces which reflect the principals of equality, diversity and inclusion 7
2. Global Megatrends have redefined and will continue to redefine Real Estate Internationalisation of Real Estate Involvements Activity Internationalisation Investors, Users, Developers, Service Providers Evolution of global delivery platforms in Real Estate Investment Management and Services Evolution of the market infrastructure to support a wide range of International Real Estate involvements Technology the electronic dematerialisation of consumption and production activities ecommerce, remote working - reshapes how we use space the application of technology to real estate practices principally in the form of PropTech but increasingly also generative AI and the digitisation of a range of real estate involvements for example the Tokenization of real estate assets Increasing emphasis on data analytics, digital tool kits and the use of big data applications in a range of real estate involvements 8
Climate Change - the abstract is becoming more tangible for many people on the planet. The built environment accounts for 40% of Global CO2 emissions Futureproofing of real estate climate risk Sustainability and ESG - Ratings and Benchmarks ESG Investing and Green Finance Signification financial commitment to transitioning to sources of green energy in the EU and US. 9
Demographics, Structural Change and Increased Urbanisation Changing sophistication of real estate asset markets Financialisaton of real estate as an asset class. Explosive growth in Indirect Investment Revolution in Performance Benchmarking Rise of so called alternative property sectors and more operational forms of real estate Logistics, Healthcare, Life sciences, Residential, Senior Housing, Student Accommodation, Data Centres etc co-working and co-living platforms Cities Redefining the world city increased territorial competition for Real Estate investment UrbanTech, Smart Cities and Governance Greater emphasis on creativity and entrepreneurship in a range of real estate involvements Real estate professionals and businesses who need to be more ethically and socially aware EDI 10
GLOBAL REAL ESTATE INVESTMENT Volumes 2007-H1 2023 11
Global Listed Real Estate Sector FTSE EPRA NAREIT Global Top 10 Listed by Market Cap (December 30 2022) 12
Top 100 Real Estate Investment Managers in aggregate (Assets $ trillion) 13
Top 15 Global Real Estate Investment Managers 2022 14
Proptech Venture Capital Investment 15
Global CRE Investment 2015- 2022 by sector 16
GLOBAL Investment in Alternatives Number of Markets 2022 17
3. Some thoughts on the future Real estate markets will continue to be redefined by global megatrend impacts. They continuously reshape the real estate sector through the creation of new opportunities. Technology REX Implications for use and location and ultimately investment The digitisation of real estate involvements The impact of Generative AI on the real estate sector and real estate professionals Climate Change Transition to Net Zero The rise of ESG investing Futureproofing Alternative property sectors will continue to offer new opportunities 18
Contact Details email: p.e.darcy@reading.ac.uk https://www.henley.ac.uk/research/academic -areas/real-estate-and-planning Why Study Real Estate? https://youtu.be/qMSvkCDyrXw 19
