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The 2020s have so far been an unpredictable and turbulent landscape for investors to navigate.
Kearney’s Investment Confidence Index shows that only 57% of investors are confident about the global economy in 2021. This is a 15% drop from 2020, prior to the onset of the COVID-19 pandemic. However, the initial downturn spurred by the pandemic has been matched by incremental growth in many regions and sectors. As people readjust to life with coronavirus, the good news is that money is once again changing hands.
By analysing trends and planning ahead, investors can make good long-term decisions and take advantage of the existing market’s opportunity areas. The following are the next big real estate trends for the coming years that should be on your mind as an investor.
1. Sustained growth
The global economy is recovering. The combined GDP of G20 countries returned in Q1 of 2021 to pre-pandemic levels. It is worth noting that this comes with huge differences between countries; Germany and the UK, for example, are still lagging far behind.
On the whole, though, GDP is climbing back up after the falloff of 2020, and this should continue into 2022. Though there is no certain outcome from a growing market, this may mean higher prices and more activity for the real estate sector. Investors should factor these variables into their long-term planning.
2. More first-time buyers
The move away from a seller’s market should lead to a growing number of first-time buyers. There was already a strong appetite for young adults to get on the property ladder before the pandemic, and this is set to continue.
Many millennials are looking to become homeowners as they enter the higher-earning years of their careers and start families. Investors should consider that first-time buyers will mostly be looking for affordable houses in up-and-coming areas. We predict that this profile of home will be hot property in the coming years.
3. Continued demand for rental property
While the number of homeowners is set to increase, large groups of people will still be unable or unwilling to make the big step. Financial uncertainty caused by the pandemic has caused many to put their property plans on hold. This means that the rental market remains a reliable sector for investors, particularly as Gen Z’s older cohort moves out from home for the first time.
A buying-to-let strategy could yield good results in the near future. One consideration for investors is that rental properties may incur additional maintenance costs, such as when buying strata properties.
4. Big growth in the suburbs
The pandemic has called into question the notion of city living. Closures in urban centres, the rise of working from home, and a need for more space are all making properties in the suburbs highly desirable.
The real estate industry is currently playing catch up with this suburban sprawl. Houses that are fully for remote work with full home offices could become the norm. Small towns will develop with trendier downtown areas to attract younger families still seeking a flavour of city life. This is a key area to watch. Property prices will only continue to rise, making the suburbs a place with good investment potential if you can find the right deal.
5. New technology
The real estate industry had to quickly adapt to new circumstances in 2020 and work remotely. Though gatherings should become more viable in 2022, the use of virtual technology is likely here to stay. Examples of this include online platforms connecting owners with buyers, electronic paperwork, and virtual property viewings.
These distanced technologies form part of a wider trend of tech integration within the real estate sector. Luxury houses are increasingly equipped with smart home tech. Expect AI to play a role in design and planning. As with all industries, new technology will become an increasingly integral part of real estate. Investors of tomorrow will need to be tech-savvy.
As the market becomes more active in the coming years, the opportunities for investors will increase. These opportunities will vary depending on where you look, but the headline is that there is money to be made.
