A melody across the evolving movements in Real Estate series in the past few years has been that real estate investors reliably cite a scarcity in the availability of core assets for purchase. Competition for these resources is influencing raising prices and inspiring investors to deliberate new strategies for accessing long-term yield – including attempting into substitute asset classes of advancement.
And the same trend is becoming increasingly evident in infrastructure. In a recent published report of February 2017, one private capital research firm said that 64% of the managers it measured, reported that it was becoming more difficult to find attractive opportunities, compared to just 4% who were finding it easier. And 78% said that they were seeing more race for core assets. A more fluid market with ever lessening lease lengths optionality may no longer be optional. These are some watchful trends that are identified in reshaping the real estate market in 2017 and will continue to do so further.
Across the incipient trends sequence this year, there endures to be a mounting curiosity in substitute or niche sectors which deal a stability of income returns and amount of diversification when that mainstream real estate aspects elite and vulnerable. While the yields may be attracting, the asset will require more active management and managers who can manage with the operational traits of real estate.
Optionality and flexible dwellings
Optionality is a catchphrase for real estate investors and occupiers. It permits users to adjust their space desires in terms of size, scene, and use as-needed. It offers property owners the ability to maximize maximum value and top use based on immediate tenant demand. These prospects are real, but the execution is complicated with so many moving parts.
Motivation on affordable housing
In order to deliver affordable products, home sizes are enduring to shrink. In Hong Kong, this movement has taken off in a big way, with at least one main developer adopting the new model as a key plank of its enlargement strategy, focusing on apartments with footsteps of just over 160 square feet. This reflects the fluctuating demands from younger (and some senior) occupiers who are prepared to accept less personal space as extensive as they have access to part social facilities such as gyms, office space, living areas, and even kitchens within the same building. Contemporary approaches of construction can also be part of the resolution to affordable housing as modular construction becomes the norm and robots join workers on construction sites. Affordable housing may be the real estate industries’ susceptible spot or an opportunity to change ingeniously into a large and growing market.
While the real estate sector regulates to a sustained period of uncertainty there will be new opportunities created from this disruption. The pace of change is quickening and new technologies are serving real estate to deeply rethink its structure and products to acclimate to the changing desires of the market.