The future of private real estate: Predictions for the next decade
September 2012
How is the real estate industry going to change over the next ten years? What will shape the industry over the longer term and beyond? This paper identifies the following ten potential trends and issues that could impact the shape of the industry between 2012 and 2022 (in no particular order):
- Secondary trading takes off on a global basis.
- Continuing domination of the U.S. private real estate market.
- Longer term investors will include land as a core part of their real estate strategies.
- Evolution of the buy, hold and sell private equity fund model.
- An increased awareness of governance issues globally.
- The presence of new ‘rising industry stars’.
- Core investment strategies will become a focus for investors.
- The shift from defined benefit (DB) to defined contribution (DC) pensions will present challenges and opportunities.
- The globalization of real estate will increasingly require an industry body at the global level.
- ESG (Environmental, Social and Governance) issues will be top of the agenda for institutional investors.
For what is one of the oldest and most traditional of asset classes in the world, the next ten years will undoubtedly see a substantial change to the way we do business in real estate. While many of the ten potential game changers listed here may not turn out exactly as described, the future top talent and leaders in real estate will have the wherewithal and flexibility to navigate through these trends, and more.
This article was first published in Understanding Private Real Estate by PEI in July 2012[1]
[1] Williams, D. (2012, July). “The future of private real estate: Predictions for the next decade”. Understanding Private Real Estate by PEI. 10, 89-96. ISBN: 978-1-908783-11-0. Available at: http://www.peimedia.com/product.aspx?cid=&pid=271477.
Authored by
Please remember that all investments carry some level of risk, including the potential loss of principal invested. They do not typically grow at an even rate of return and may experience negative growth. As with any type of portfolio structuring, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns.
Specific sector investing such as real estate can be subject to different and greater risks than more diversified investments. Declines in the value of real estate, economic conditions, property taxes, tax laws and interest rates all present potential risks to real estate investments. Fund investments in non-U.S. markets can involve risks of currency fluctuation, political and economic instability, different accounting standards and foreign taxation.
