The real estate market is still recovering from the bust of the early 2000s, as millennials are edging hesitantly into their nesting years. 2020 is only three years away, but the changes that those three years might herald could result in a real estate world very different from the world we know now.
Perhaps the biggest change is the trend of increasing urbanization. People, especially of the younger generation, are being drawn more and more into the cities. Estimations predict that there will be 37 megacities in 2025, up from 23 currently. Cities on the ascent include Shenzhen, China; Lima, Peru; and Bangalore, India. Researchers expect to see the largest amount of growth happening in the Asia-Pacific region. These new cities are opening up emerging markets for real estate developers. Estimates suggest that the year 2020 will create investable real estate growth to rise by 55 percent.
Growing population in these regions means growing demand for new real estate, for housing as well as for retailers, office space, and other facilities. The buzzwords for these new facilities are technology and sustainability, and developers will need to focus on these areas to appeal to the market.
These markets offer lots of potential revenue for savvy developers, but they also come with significant risk, due to the fast and sometimes unpredictable growth in these urban centers, compounded by the cost of land in these regions.
We will also see changes in how real estate is sold. Experts are split on whether many more millennials will have purchased their own homes, or opted to stick largely to rented apartments. The trends in urbanization seem to point towards the latter, as city-dwellers tend to rent, rather than own, their homes – due, again, to the high cost of urban real estate.
On the other hand, many expect millennials, at least those living outside of cities, to settle down in a permanent home once they earn enough money to do so. And as with past generations, millennials working in cities may eventually decide to move outside the city and commute in daily, due to high rents and stressful city lifestyles.
Technology will also change how real estate is sold. Real estate agents might begin using 3D technology, such as that found in VR headsets, to show off homes. This would be especially popular with people moving long distances. Buyers are also becoming more interested in the neighborhoods surrounding their homes, especially things like local culture and walkability.