The Future of Real Estate 2024
As we approached the last 2 months in 2023 uncertainty loomed over the global economy and the commercial real estate sector in the USA. Economies around the world were navigating a precarious path due to a combination of factors. These include the ongoing conflict in Ukraine, extreme weather-related disasters, shifts in population migration, and persisting concerns about financial stress due to tightening monetary policies. Also, one significant source of concern was the collapse of SVP Bank, a major lender that had provided financing to numerous commercial properties. This event had widespread implications for the real estate market, creating uncertainty around the stability of loans, property values, and the availability of credit.
The conflict between Israel and Hamas has added to the prevailing uncertainty, along with recent statements from the Federal Reserve. Speaking to a gathering of economists and central bankers in Jackson Hole, Wyoming, Chairman Powell noted the current state of inflation carries significant implications for the economy and raises hopes. Nevertheless, Powell emphasized that some of these improvements may be temporary
He reiterated the Federal Reserve’s commitment to reducing inflation to its 2% target.
Powell stated, “The journey ahead remains long. We are prepared to raise interest rates further if necessary and will maintain a restrictive policy stance until we are confident that inflation is sustainably moving towards our objective.”
The outlook for 2024 appears remarkably distinct from the period before 2020. The global landscape has been profoundly reshaped by the events and challenges of the past few years. The COVID-19 pandemic, economic shifts, changes in work and lifestyle patterns, and evolving geopolitical dynamics have left an indelible mark on the world. As a result, expectations, strategies, and priorities in various sectors, including economics, technology, healthcare, and real estate, have undergone significant transformation. The new normal of 2024 reflects a world that has adapted, innovated, and redefined itself in response to these transformative forces.
The real estate industry is undergoing a rapid transformation, driven by technological innovations and changing consumer preferences.
According to the Deloitte Center for Financial Services 2024 – Real Estate Survey, Digital Economy, Build-to-rent and Senior care are the 3 top asset classes for 2024.
Here are Some of the Key Trends that will shape the Future of Real Estate
Digital Economy – mainly data centers, smart warehouses, and tokenization.
Data Centers: Data centers are essential for the storage, processing, and management of vast amounts of digital data. They are the backbone of cloud computing, online services, and digital infrastructure. Data centers play a crucial role in the digital economy by supporting cloud services, web hosting, and various online applications. As the network of data center facilities continues to grow in response to the increasing demands of the digital age, the factors of fiber density, quality, and cloud accessibility are poised to become pivotal considerations in the selection of new facility locations.
Smart Warehouses: Smart warehouses are equipped with advanced technologies like automation, robotics, IoT sensors, and real-time data analytics. They optimize the storage, retrieval, and distribution of goods and play a vital role in e-commerce and supply chain management within the digital economy.
Tokenization of real estate is one of the most exciting trends in the industry. By converting real estate assets into digital tokens, blockchain technology makes it possible to fractionalize ownership and trade assets more efficiently and transparently.
As explained in the article Token adoption grows as real-world assets move on-chain, tokenization is already having a significant impact on the real estate market. In the first three quarters of 2023, the value of on-chain real estate grew by over 100%. This growth is being driven by a number of factors, including:
Increased liquidity: Tokenization makes it easier to buy and sell real estate assets, even fractional shares. This is attracting new investors to the market and increasing liquidity.
Lower barriers to entry: Tokenization makes it possible to invest in real estate with a smaller amount of money than would be required to purchase an entire property. This is opening up the market to new investors who may have been previously excluded. Greater transparency: Blockchain technology provides a transparent and immutable record of all transactions. This can help to reduce fraud and increase trust in the market.
The Rise of Virtual Real Estate
Virtual real estate is a new and emerging market that is rapidly growing in popularity. Virtual worlds like the metaverse offer users the opportunity to buy, sell, and develop digital real estate assets. This market is still in its early stages of development, but it has the potential to become a major part of the real estate industry in the future.
The benefits of virtual real estate:
New investment opportunities: Virtual real estate offers investors a new and exciting asset class to invest in.
Global reach: Virtual real estate can be bought and sold by anyone in the world, regardless of their location.
Low-cost investment: Virtual real estate can be purchased at a fraction of the cost of traditional real estate.
High potential returns: Virtual real estate is a relatively new market, so there is a lot of potential for growth and appreciation in value.
The Future of Real Estate Investing
Real estate investing remains a popular way to build wealth, but the market is becoming increasingly competitive. In the future, investors will need to be more sophisticated and strategic in their approach and focus on the increasing popularity of alternative asset classes, such as digital economy, built-to-rent, senior housing, and life science real estate.
How to successfully invest in real estate in the future:
Focus on niche markets: By focusing on a specific niche market, you can develop a deep understanding of the market and its dynamics. This will give you a competitive advantage when identifying and evaluating investment opportunities.
Use technology to your advantage: There are a number of technology tools available to help real estate investors. These tools can help you to identify and evaluate investment opportunities, manage your portfolio, and track your performance.
Build a team of experts: Surround yourself with a team of experts who can help you make informed investment decisions. This team may include lawyers, accountants, and other real estate professionals.
How to Create a Sustainable Real Estate Business
Sustainability is becoming increasingly important in the real estate industry. As consumers become more aware of the environmental and social impact of their purchases, they are demanding more sustainable real estate options. To succeed in the future, real estate businesses will need to adopt sustainable practices and develop products and services that meet the needs of eco-conscious consumers.
Creating a sustainable real estate business:
Focus on energy efficiency: Energy efficiency is one of the most important aspects of sustainable real estate. Real estate businesses can focus on energy efficiency by retrofitting existing buildings and developing new buildings that meet high energy efficiency standards.
Use sustainable materials: Real estate businesses can also reduce their environmental impact by using sustainable materials in their construction and renovation projects. Sustainable materials include recycled materials, renewable materials, and locally sourced materials.
Reduce waste: Real estate businesses can also reduce their environmental impact by reducing waste. This can be done by recycling construction and renovation waste, and by composting food waste from office buildings and apartment complexes.
Support sustainable communities: Real estate businesses can also support sustainable communities by developing mixed-use projects that promote walkability and bikeability. They can also invest in green spaces and public transportation.
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About Susan Lindeque
Susan is a visionary entrepreneur, futurist, and thought leader with over 35 years of experience in business, finance, investments, real estate, wealth creation, and technologies.
Her Massive Transformation Purpose is:
“Working to Inspire Abundance for Humanity & Invest in Exponential Technologies.”
She is the founder and CEO of Avestix Group, a global asset, investment, advisory, and technology company that focuses on public securities, next-venture capital, commercial real estate, and alternative assets based on ESG principles.
Susan is passionate about nurturing innovation, transformation, and disruption in the new decentralized economy. She leverages her extensive network and deep industry expertise to select and empower exponential technologies that will disrupt, transform, and impact industries.