Recently, The Fourth Industrial Revolution is becoming a hot topic that gains world-while attention. The development of a new world of advanced technologies will alter the way we live and the way we work. Some jobs will disappear, others will grow and jobs that don’t even exist today will become commonplace. Real estate, is also predicted as one of the industries affected considerably by the Fourth Industrial Revolution. Are you curious about how the real estate industry will be by 2030? Is the industry well-prepared for this revolutionary change? Are there any challenges that we have to deal with?
Changes in the residential market
Firstly, a new kind of consumer requires new ways of doing real estate business. While young people have tended to use flexible services like Airbnb (AirBed and Breakfast, an online marketplace and hospitality service that enables people to lease or rent short-term lodging), on the other hand, the ageing of societies will challenge developers and businessman in real estate. They need to satisfy the needs of an ageing population by developing new ideas for assisted living, approachable equipment, and creating a healthy environment that is good for the health of the elderly.
Secondly, migration and urbanization are proceeding promptly, and we are not prepared. The demand for affordable housing and urban infrastructure from transport facilities to telecommunications is increasing swiftly, which creates abundant opportunities in this sector for businesses. However, the quantity of the mid-range apartment is very small, creating a difference between the rates of supply and demand. A McKinsey report in 2014 showed that 1.6 billion people could struggle to secure decent housing by 2025.
Rapid urbanization causes significant economic, environmental and health effects on urban communities, which in turn, create strong pressure for the government, urban planning, and the real estate industry on how to ensure the quality of infrastructure systems, such as transportation, utilities and telecommunications.
How we will work differently and the impact on office space in real estate 2030
As the march of tech advancement revolutionizes working life, the places we work will adapt and evolve. It can be noticed that attractive office space is becoming a vital tool in the war for talent, and it will be increasingly flexible and multifunctional. Flexible spaces, such as co-working offices, will be used tactically as freelancers are increasing rapidly and become a trend in the structure of the workforce.
Currently, companies and organizations are changing traditional thoughts and move to a new approach to location. Co-working spaces are growing in popularity, facilitating highly-skilled freelancer workers and greater partnership working between organizations. By 2025, the number of coworking providers will grow as companies move to a location strategy built out from a nucleus, a strategic location and surrounded by tactical flexible spaces. This change, combining with the rise of lean companies which employ fewer staff directly, could also lead to an approach to the office market in real estate that only uses co-working and serviced-type office spaces.
Furthermore, connectivity is considered as one of the most essential factors for business in location choices. Due to the greater connectivity as well as the sequence of the changing workforce, the shift to real estate portfolios built around center hubs and made up of the few locations will be empowered. These hubs include networks of flexible space around for staff to work from and to host the growing contingent workforce. They will reinforce culture, instill brand and encourage interaction and collaboration.
The increase of connectivity makes smarter buildings become more popular. Designed with modular fit-out, these buildings can be easily redesigned at lower expense with more zonal and flexible spaces, based on greater understanding of workspace use. Thanks to using new technology, these building can provide the workforce with a space that is cost efficient and limits environmental impact.
The risk of job loss
Rising automation with advanced technologies is replacing people’s work, therefore, jobs and skills are the uncertain future of the real estate profession. Within 50 years, robots and computers will do much of the work currently done by humans, and low skilled jobs are being disappeared or automated.
According to researchers at Oxford University, the potential for artificial intelligence computer innovation to replace these jobs is estimated at between 97 and 99%. Expect in the World Economic Forum Annual Meeting (2016) also forecasted that real estate brokers, brokerage clerks and telemarketers may lose their jobs in the near future.
The transformation in the market and jobs will cause fierce competition between businesses and individuals. To be able to survive firmly, real estate entrepreneurs will need to create their own job. This will require entrepreneurial skills and competence.
How can businesses and individuals deal with these changes?
The recent research of Oxford University indicated that it is not just brokers but the entire real estate industry that have to rethink how new technologies as well as shifts in demographics and behavior will impact upon real estate jobs, skills and business models.
The increase of talent competition and progress in workplace data means that specification and suitability will need to be actively managed to meet the needs of the individuals as well as organizations. They need to pay attention to psychographics where real estate demand is primarily dominated by consumer personality, values, opinions, attitudes, interests, and lifestyles. As consumers become less predictable, these psychographics are the new demographics for determining real estate success.
An industry of wellness in buildings is emerging – with an expansive and holistic outlook. The report “FAST FORWARD 2030, The Future of Work and the Workplace” of CBRE (2014) showed that air, water, light, fitness, nourishment, comfort and mind will be 7 standards to consider and choose a good place in the future. These emerging standards today will institutionalize wellness into buildings and workplaces by 2030.
In this perspective, it is necessary for providers of commercial buildings and offices to develop new business models and work with partners who understand services and have experiences in order to compete with emerging workplace competitors.
Besides, they can help society to find solutions for migration and urbanization by developing new social housing approach, proposing management policies and innovative encouraging models, such as land value capture, a taxation of the windfall gains when landowners benefit from publicly funded infrastructure.
In the fierce competition and the changing economy, only those that can offer and charge for a premium level of service, specialist knowledge or meet the demand of the market can exist.
Individuals: brokers, agents
It is significantly necessary for everyone to enhance educational and skill levels to deal with the market competition.
Especially, creativity, social interaction skills and emotional intelligence will become increasingly essential when employment growth in the service industries is likely to continue into the future as we move to a knowledge economy.