Real Estate Outlook 2018 - The Australian Perspective

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Real Estate Outlook 2018

The Australian Perspective

Things look positive in 2018 for the Real Estate and Construction industries. Although the uncertainty of previous years has not entirely gone – and some markets won’t be as buoyant as they have been – on the whole the road ahead looks more settled and will be very busy on the implementation front.

Our macro-economic analysis shows that 2018 won’t be without its challenges. As multiple variables that impact the sector begin to settle, the complex ecosystem of third parties as well as regulatory requirements continues to expand, as well as the need to manage new frontiers and structural changes.

To organise how best to consider these developments in the industry and prioritise according to your own strategy we cluster these trends and new frontiers into three sections: Markets and Investment; Technology; and People.

Markets and Investment

The good news for Australia is that global economic growth has picked up during 2017, much of that driven by Asian economies, and in recent months that has translated into much stronger employment growth in Australia. Deloitte Access Economics economist Kristian Kolding and Anthony Moeller outline the outlook for the commercial, industrial and retail sectors and identify some risks.

Residential build-to-rent has typically become prevalent in markets with falling affordability, higher population growth and constrained supply. As Deloitte Financial Advisory Partner, Stephen Hynes, outlines, these are all factors applicable to the current Australian property sector.

A-REITs are one of the most public faces of Real Estate in Australia, given the high level of corporatisation of the sector. In this article Tapan Parekh, a transactional valuation specialist partner and Deloitte Australia’s real estate leader Alex Collinson, consider some of the trends in the current market and recent movements.

Over the past five years, Western Sydney has been in transition from, being a poor cousin to the big and shiny CBD to its east, to becoming a region full of potential. David Hagger discusses its promise of becoming a key real estate, development and construction hub and asks ‘How can you afford not to be in Western Sydney?’

Technology

Technology start-ups seem to be here to stay. Rapid advancements in technology have lowered entry barriers for tech startups. Alex Collinson scans what’s happening globally, where real estate fintech start-ups increased by 18% from 246 in 2008 to 1,372 by 2017, and outlines types of startups, ways of working. And how best to benefit.

The rise of smart buildings is driving a rapid uptake of new interconnected technologies such as the Internet of Things (IoT), cloud and mobility. As David Owen, Cyber Security and Privacy Partner points out, as fast as we develop those great experiences we also introduce risks – many of them entirely new – that demand new strategies to identify them and protect the value they hold.

Real estate companies have been relatively slow to effectively adopt technology and this reflects in the many operational inefficiencies that are in the industry today. Jeremy Pitchford looks at what technologies can do to augment productivity and deal with inefficiencies and errors.

Smart, integrated planning platforms give organisations a strong competitive advantage in the market. It is all about ‘time to value’, ‘rate of change’ and ‘agility’, in a market with declining opportunities. Digital partners Tony Trewhella and Thierry Lotrian unpack how best to use those planning platforms to get collaboration and synchronicity.

People

Only 10% of the global real estate and construction sector agree that their organisation have sufficient talent today to support their digital business strategy. Human Capital Partner Pip Dexter and Director Claire Jenks take this worrying statistic and ask us to reimagine our talent and cultures.

The Last Word

What would a Real Estate Investment Trust look like in a fictitious scenario ‘What If China stumbled’? Kristian Kolding and economist Cory Brown outline a Black Swan possibility to encourage scenario analysis when making key decisions around asset allocation, pipeline and lease management, financial structure and stakeholder management.

Published: February 2018

Real Estate Outlook 2018

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