2022 was quite a challenging year for the real estate sector, especially with the economic crisis and climate change. But, the industry was set to recover and continue growing as one of the major players in economic recovery and development. Setting foot into 2023, real estate leaders are optimistic about real estate, following the easing of travel restrictions and the low COVID-19 infection rate, which have increased the economic performance and growth of the sector.
With such optimism at the backdrop, the real estate industry is encountering emerging trends that will help in shaping its future in the months and years ahead.
Workforce transformation
As pandemic restrictions ease, workforce transformation will come in handy, primarily when the work-from-home or hybrid setup is being implemented in most sectors. Unlike pre-pandemic, most of the employees have yet to return to working face-to-face, and as professional services firm PricewaterhouseCoopers (PwC) observed, only a handful of employees work in a physical office within a day, thus leading to increasing demand for a return to office in most leading companies.
However, the complete shift of face-to-face work is still under discussion, as most employees have their own work preferences and are still not ready to go back amidst the ongoing health pandemic until today. However, the real estate sector is impacted by the work-from-home setup since the office real estate stock can be eliminated or repurposed.
On the other hand, many companies will continuously cling to working in a hybrid setup, as a precaution in keeping their workspaces and respecting the work preferences of their employees. The hybrid setup sets an advantage for employers’ and employees’ work preferences and brings real estate into the digital world, creating an opportunity for sustainable growth in the sector.
Sustainability and climate change
Like other sectors, the impact of climate change is a strong incentive for the real estate industry to take action. For instance, the industry has been incorporating environmental, social, and governance (ESG) initiatives in its business operations.
Some sustainable initiatives that the sector is currently focused on include: developing green buildings and using water, eco-friendly, and energy-efficient materials in business operations that will help achieve a net-zero future.
As the Urban Land Institute (ULI) noted on its latest Emerging Trends in Real Estate report for the Asia-Pacific, many countries have already started this green movement. For instance, new net-zero buildings were being constructed to raise sustainability awareness and acquire carbon efficiency in leading countries like Australia and Japan. But in other Asian regions, adopting net zero standards can be extremely challenging, considering the region’s overall energy and density intensity. However, countries can bridge this gap by taking little steps in adopting net-zero initiatives such as acquiring renewable energy from electricity and purchasing carbon offsets.
In addition, water usage effectiveness and renewable energy have also been impacting the sector. As of now, data centers are searching for ways to reduce energy usage and cut carbon by using rechargeable batteries and rooftop solar panels, according to the said report.
Affordable housing
As a solution for production backlog, micro-apartments are also a rising trend, as Gino Olivares, the national president of the Organization of the Socialized and Economic Housing Developers of the Philippines, Inc., was quoted as saying in a previous report by online property marketplace Lamudi for the third quarter of 2022.
Micro-apartments are smaller studio apartments that have all the amenities and functions similar to a standard apartment in a space that is less than 350 square feet. Known as a place with minimal space, it features essential amenities, including a bathroom, kitchen area, and living and sleeping space. Recently, micro-apartments are attracting young professionals or those people who tend to live alone, according to real estate and landlord expert Erin Eberlin in www.liveabout.com.
Another trend mentioned by Mr. Alvares is co-buying or co-ownership, defined as the decision made by two or more persons in dividing ownership of a residence after it has been purchased.
The property owner in a co-buying arrangement could be the following: family, friends, couples, or business entrepreneurs. Unlike being the owner and co-owner of a business, co-buying is based on the individual interest of the owners.
Co-buying is still an emerging real estate trend that may be the key to ending the ongoing housing crisis because it is said to provide cheaper mortgage payments, more equity growth, and utility cost savings.
Moreover, the rights and ownership of co-buyers in property interests are also crucial. Although co-buying may be relatively new to the Philippine market and may pose some complications if not done right, it can still be a good strategy for owners who are eyeing investing in real estate.
Metaverse
Metaverse is also taking a spotlight on the real estate industry, according to PwC, as leaders are optimistic and eyeing the impact of the digital platform and how it can shape business enterprises and consumers to engage with products, services, and with each other.
The digital platform can improve the workplace experience, such as enhancing collaborative spaces, complementing the physical office, and upskilling employees and business operations.
With metaverse, properties can be bought, sold, purchased, and leased. Given that buying virtual homes is significantly less expensive compared to physical houses, this might make real estate create an opportunity to invest more accessible to a broader range of investors.
Similar to other new technologies, the metaverse still has many risks and is far from perfect, yet it’s been already attracting the interest of the sector.
“Interest in the metaverse is hot, even though many of its concepts are years away from being solidified. Your company doesn’t need to be a metaverse leader today, but you should explore the potential implications to your organization,” PwC advised.
Despite the obstacles brought on by the pandemic, the outlook for the real estate sector largely shows optimism as it adopts long-term goals and perspectives for the industry and as real estate professionals are working on strategies that allow the industry to thrive and see steady growth in return.
“Although real estate capital markets are constricting, they are still open for business, investors are still buying high-quality properties, leaders will continue to lend, and companies should move forward with cautious optimism through this current cycle and prepare to adapt to quick market changes,” Byron Carlock, Jr., US real estate leader for PwC, said in a statement. — Angela Kiara S. Brillantes
