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The world is changing. And with it is changing the real estate arena. There are several contributing factors but certain developments are noteworthy. Researchers have conducted surveys that show that people are increasingly preferring to live in secondary and tertiary cities and valuing quality of life over material gains. Consumer preferences have also changed owing to technological advancements where people now prefer modern day amenities in their real estate property
Graana.com gives you an overview of the changes in macro trends within the real estate sector as shown in the graph below:
Shift in Location Preferences
There is a shift in the preference of location for residential purposes among citizens. The aching memory of the financial crisis and the uncertainty that followed have made people nervous. The current COVID-19 crisis has further added fuel to the worries. The subsequent retrenchment have raised eyebrows among the populace regarding the sustainability of expensive high-end developments in skyrocketing properties. Thus, people are increasingly preferring second and third tier cities for investment purposes.
Jenna Gerstenlauer, CEO of Sound Mark Partners, says that her firm is focusing on developing Class A projects in secondary markets. While explaining her perspective, she said, “investors favor these sorts of projects over luxury condos priced at the top of the market that might not be able to command the same rents in a downturn.”
The concerns are valid. The property prices in urban areas are increasing exponentially. The price of a small apartment in a developed area is equivalent to the entire year’s salary of a middle-class individual. All major cities have witnessed this trend over time. Karachi, Pakistan has seen an unprecedented spike in property prices from 50% to 100% in a span of over five years (2015-2021) making it a distant dream for people to own a house in the metropolis. This lack of affordability is the dictating factor behind the change in behaviour and preference for suburban areas.
Value of Better Quality of Life
People are moving back to the suburbs for a better quality of life. All these areas do not possess the same potential from an investors point of view; some places have more prospects of growth while some places still need attention. But the underlying notion remains the same. People are shifting to the suburbs because of the benefits they provide. The houses are cheaper which means for someone who enjoys gardens or swimming pools, they can afford a house with these amenities in the suburbs. Moreover, they can be away from the hustle and bustle of the city and lead a simpler life. These areas also have potential for growth which means there are developments with regards to the provision of universities, hospitals, schools etc. With the installation of these infrastructures, there is also potential for employment and economic growth.
A senior official at one of the world’s top 10 sovereign wealth funds highlighted their residential property development strategy. He stated that their ideal location was one where there was “focus on university towns where there are space constraints, an educated workforce and potential for innovative micro-hubs.”
Research states that there is increasing interest in rental properties as opposed to home ownership. This is because of the greater emphasis among the millennial for a life of freedom and mobility. They want the possibility of being able to travel and explore their options in comparison to their ancestors who preferred stability. The millennial are less risk-averse in this regard.
Maurice Malfatti, Managing Partner at Blue Heron Asset Management, states that, “the move away from home ownership to renters, and a focus on experience over ownership, is permeating all age groups, not just millennials.” This stance is corroborated by the census data of the United States. It states that interest by people aged 60 or older in renting properties increased by 32% over the last ten years.
Likeness for Shared Spaces
There have been many social, cultural and technological developments happening and as a result behavioural changes are occurring. The nature of jobs are also changing due to advances in technology which enables people to work remotely through a small device to achieve their deliverables. Technology has also made it easier for people to access things required for daily use. With just a click, people can now order groceries or food to their doorsteps. This has made it easier for people to survive for days without being glued to a specific location.
In addition, more and more women are joining the workforce which is bringing acceptance for flexible working environments. The increasing traffic woes and pollution has also reinforced the trend of work from home. The incidence of a global pandemic (COVID-19) has further accelerated the trend by forcing people to work from home.
Furthermore, the house-sharing model is popular in the urban areas of the Asian countries where the population density is high and people are flocking into cities in high numbers in search of employment. To accommodate the population influx, new buildings are designed specifically in order to accommodate them in a smart way. Hence, the new designs show purpose-built buildings which have separate rooms and a shared lounge or living space for entertainment. The kitchens are also usually shared. This shared model is suited to the millennial who are increasingly looking for cost-effective and sustainable ways of living and also for older populations who are more accepting of the notion due to its affordability.
All these behaviour changes in Asia are due to a move towards digitisation, connectivity and mobility. The situation is different in the North American market but it is expected that acceptance for co-living will take place in the future.
These are times of technology. Things are constantly changing around us. It means that even property owners are expected to update their skills and provide facilities and modern day services. The availability of the internet is essential to get work done. This is not only a millennial requirement but older generations also prefer basic facilities as the dynamics of the world have changed the working dynamics.
In addition, the house owners are also making use of technology to attract more tenets. The world of technology makes it easy to buy, rent and sell with just a click. Several apps have been developed for this purpose. Graana, Pakistan’s 1st online real estate marketplace, is one such initiative that makes it easier and convenient for property owners to manage their properties. The Graana app is trustworthy and reliable. One can make use of their user-friendly portal to add details and leave the hard work for the experts. The app will find a suitable solution according to one’s preferences. This has surely made life easier and revolutionised the real estate sector.