Why we must reimagine real estate for a better future

Real estate uniquely shapes almost every aspect of our lives – each person has a relationship with the spaces they encounter and interact with daily. Yet its significance – for individuals and businesses – is often overlooked and underestimated.

Countless features of the social and economic landscape, from innovation to business cycles, can be traced partly to real estate.

As societies contend with an increasingly complex global outlook, the role of the built environment must take centre stage and we should strive to deliver more liveable, sustainable, resilient and affordable buildings and cities.

Liveability addresses healthy, human-centric, and smart public and private spaces that support the occupant experience of everyone who interacts with those spaces. Sustainability focuses on increased energy efficiency and resource utilization, aimed at reducing whole-life-cycle carbon emissions.

Resilience extends beyond physical climate risks to encompass various challenges, from buidlings' functional and competitive obsolescence to public health shocks and local fiscal policy imbalances.

Affordability reflects the pervasiveness of housing shortages in cities worldwide and the pernicious impact of high housing costs.

Reimagining Real Estate: A Framework for the Future calls on industry and government to take action to advance this vision, working to ensure value creation for all stakeholders, including investors, developers and lenders.

The calls to action will require resolve. The industry has faced significant headwinds in recent years as people have embraced new ways of living, working and using technology, often with enormous impacts on demand for space.

At the same time, real estate developers, investors, lenders and others across the value chain have grappled with new headwinds in the form of a redrawn capital markets landscape.

In particular, the vociferous response of central banks to the challenge of persistent inflation has altered risk-return profiles, reshuffling many of the industry’s priorities even as monetary policies begin to ease in most parts of the world.

The public sector has also faced numerous pressures, including acute housing shortages, severe weather events and economic, social, and climate migration, all while managing increasingly strained budgets.

Those budgets are often reliant in part on revenue from real estate taxes, emphasizing the reciprocal relationship between real estate values and the functionality of the wider urban environment.

Despite these challenges, a renewed commitment to collaboration between the public and private sectors in economies at every stage of development across national and regional borders is required, as neither sector can succeed alone.

The public sector can support and mobilize private investment in real estate by prioritizing the following actions:

While policy and regulation are foundational in determining the structure of capital markets and other facilitators of real estate investment, ultimately, the private sector must be positioned to execute these goals. It can prioritize the following actions to advance progress:

Real estate’s role in the global economy and society is evolving. As industry stakeholders reimagine spaces and invest in a thriving built environment, it’s essential to recognize that these efforts only succeed if the related investments can attract capital and deliver competitive market returns.

This understanding should guide practical strategies that benefit market participants and the communities they serve.