The real estate industry needs to transform to serve the needs of people and cities in the next decade, according to a new report released Wednesday by the World Economic Forum. COVID-19 has revealed vulnerabilities throughout the real estate industry, ranging from indoor air quality problems to excess supply and accelerated underlying demand drivers, which need to be addressed for buildings and cities to be healthier, prosperous and more sustainable.
The new World Economic Forum report, “A Framework for the Future of Real Estate,” acts as a road map for industry change. Developed with global real estate chief executives, the framework provides a pathway to transform buildings and cities to become liveable, sustainable, resilient and affordable.
“Real estate stands at a crossroads as cities adjust to the new realities of a post-COVID era, climate change and the Fourth Industrial Revolution,” said Jeff Merritt, Head of IoT and Urban Transformation at the World Economic Forum. This transformation of real estate – and the market disruption that comes along with it – is long overdue but, if fully embraced, promises to help us all live healthier, happier and more connected lives.”
“Today the real estate industry is facing challenges and consequently is given a chance to do better, to take more steps towards a healthier future and to make a global sustainable impact,” says Coen van Oostrom, Founder and Chief Executive Officer, EDGE, OVG Real Estate. “To optimize buildings, not only should we rethink spaces, users’ behaviours, and energy efficiency but we should also bring a stronger focus on redevelopment opportunities, circular economy, and digitalization. Let us stop waiting for others to set the example and start today, by committing to everyday incremental changes. Ultimately, we must keep a close eye on the bigger picture to be leaders in the transition to a more sustainable way of operating.”
For more than a decade, the real estate industry has experienced tremendous profitability with successful growth rates and rising investment volumes with +14% compound annual growth rates. Initially, this success put less pressure on industry leaders to innovate, but now the industry is coming under pressure from consumers, investors and regulators to better serve the health and resilience of their communities. At the same time, the lasting effects of the pandemic and the acceleration of existing trends have brought the industry to a tipping point.
“The pandemic has accelerated changes in work and lifestyles that had already been gathering pace over recent years, driven in large part by new technology,” said Christian Ulbrich, Global Chief Executive Officer and President, JLL. “As we plan for a sustainable global post-pandemic recovery, this World Economic Forum framework shows how our industry has a vital part to play in coming together to shape the future of real estate for a better world.”
The Future of Real Estate Framework identifies key enablers real estate leaders can use to ensure they are working throughout the industry to provide real estate options that are liveable, sustainable, resilient and affordable.
- Accelerating digitalization and innovation to address everything from construction costs to the occupant experience
- Value-proof business cases that are transparent and demonstrate a clear return on investment in relation to technology, sustainability and affordable housing
- Prioritizing talent and knowledge by upskilling existing workers and attracting talent dedicate to areas of innovation while ensuring diversity and inclusion
- Engaging stakeholders, throughout the industry value chain and within the local community, to ensure projects are mutually beneficial
- Ensuring regulatory frameworks effectively address supply challenges, sustainability goals and provide proper zoning and density
The framework also includes case studies from various real estate companies and exemplify the vision of the four key pillars of liveable, sustainable, resilient and affordable buildings and cities.
Industry leaders have already taken decisive action towards transformation throughout the real estate industry. Gensler’s GC3 Commitment aims to achieve net zero by 2030 in all Gensler projects and JLL’s work with the Washington Metro will provide clean energy to more than 1,500 homes.
Swire Properties has joined the Business Ambition for 1.5°C campaign and Lendlease has pledged to harness digitization to be net carbon zero by 2025 and absolute carbon zero by 2040.
Majid Al Futtaim has become the first and only conglomerate in the world to achieve LEED Platinum certification for its entire portfolio of hotels.
Signify has embraced sustainability and resilience by developing and deploying UV-C disinfection systems, an energy efficient and chemical-free way to sanitize buildings.
Schneider Electric has set clear, measurable 2025 targets around sustainability to achieve 80% green revenues, deliver 800 million tons of saved and avoided emissions to their customers and have 1000 of their top suppliers reduce emissions by 50% from their operations.
Learnings from these companies’ initiatives and many others were used to help develop the Future of Real Estate Framework which aims to accelerate these types of transformation across the industry.