Real Estate Predictions 2018 | Deloitte


Real Estate Predictions 2019

Prepare to adapt to the changing market

Welcome to the 2019 edition of Deloitte’s predictions for the Real Estate industry. These predictions discuss the Real Estate trends for 2019 that will impact your business. Read about blockchain, cybersecurity, data driven business models, and more.

Stay updated about the Real Estate Predictions

Every week one of the pressing topics in the Real Estate market will be discussed in the 2019 Real Estate Predictions. 

1 | Data Driven Business Models will change the Real Estate Industry

As technology keeps developing and becomes more affordable—for both new and existing structures—and collaboration platforms, sensors, and smart devices continue to advance, the amount of data produced by buildings is increasing exponentially. This data can give real estate market participants (investors, asset managers, property managers, and tenants) a competitive advantage and help them avoid disruption if they use it effectively to develop data-driven services and new business models focused on the specific needs of users, owners, or the property itself. But only a joint effort among all real estate stakeholders (constructors, investors, owners, tenants, and service providers) can optimize data to create insights that improve performance and profitability.

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2 | Digital Twins in Real Estate

As technology becomes more pervasive and smart buildings and precincts are being developed, real estate companies will look to create digital versions of their physical assets. The potential benefits include the ability to run and manage buildings centrally, obtain real-time data as to how tenants are using the building and provide value-add services, perform predictive maintenance based on data from sensors to reduce cost and downtime, and enhance the overall tenant experience.

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3 | Industrial Property: ugly duckling no more

Not long ago, the industrial property market was considered the “ugly duckling” of the real estate industry. In the last couple of years, however, industrial warehouses and distribution centers, have emerged as the most desirable assets within commercial property, generating higher rental growth and returns than other main commercial sectors – all thanks to the rise of e-commerce.

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Industrial property

4 | Circularity

All around the world, governments, companies, and NGOs have committed to minimizing raw material usage in the real estate and construction industry. In the Netherlands, for example, it was recently agreed that by 2030 a 50 percent reduction of raw materials usage needed to be realized.

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5 | Cyber Security Issue 1

As extensive technology advancements reshape the traditional commercial real estate (CRE) business model, owners and operators must contend with new forms of risk, including cyberattacks information security, and data privacy. For example, the growing use of IoT technologies such as sensor-enabled building management systems could broaden the attack surface for CRE firms, increasing access to sensitive data that can cause financial and reputational damage to owners/operators and tenants. The question is, then, are CRE companies ready to handle cyber risks?

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6 | Cyber Security Issue 2

With modern buildings depending more and more on technology and becoming more and more interconnected, numerous questions are arising about their resistance to cyber risks. To optimize management and increase cost-efficiency while ensuring access to adaptable and comfortable living and working space, buildings are collecting and processing information not just about the structure itself, but about us – including such technical and private data as names, IDs, photos, and videos. Protecting this data – from generation to storage to disposal – must be a critical part of the new, smarter building management systems. To do this, real estate companies, third-party suppliers, and IT companies must embed secure by design and privacy by design rules into their building development lifecycle.

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7 | Blockchain

This year’s real estate prediction about blockchain—our fourth—marks a healthy shift in perception of the technology’s impact. In our 2016 prediction, we highlighted the great potential of blockchain for the real estate market. In 2017, we predicted a year in which first generation applications would be built— borne out by the number of proofs of concept that were conducted. In last year’s prediction, we called for realistic expectations around blockchain technology, noting that several steps needed to be taken in order to implement a solution, go to production, and integrate it into the daily operations of real estate companies.

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8 | Strategic Approach to Real Estate Management

The real estate business is currently experiencing a shift in demand away from the traditional business operating model to more flexible solutions. Technological advancements and digitization, the quest for sustainability, and changes in user lifestyles are all factors that are demanding a greater level of adaptability in real estate strategic management and value creation.

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9 | Future of Work

The world of work is changing. Clients in every industry are now facing the challenges and opportunities presented by this disruption, with much thought going into how work will be completed and by whom in the years to come. The real estate industry is no different, with a significant impact on the physical workplace anticipated that occupiers, developers, and investors will need to carefully consider. Drawing on major disruptors identified by Deloitte - ranging from automation and replacement of jobs to diversity and generational change - we have identified four key trends we predict the industry will need to respond to in 2019.

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10 | Future of Commercial Real Estate

Commercial real estate (CRE) companies haven’t yet figured out how to deal with the relatively recent emergence of real estate technology startups, known as “proptechs.” While most of the broader financial services field have made the shift to a partnership mentality, CREs continue to view proptechs as a disruptor rather than as a potential source of collaboration.

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11 | Transit Oriented Development and Land Value Capture

The next generation of urban mobility presents unique opportunities for cities around the globe. Autonomous vehicles, ride-sharing services, and wideranging technology adoption are set to change the transportation ecosystem and with it, the urban landscape. Tomorrow’s smart cities will operate with increasing levels of connectivity, creative collaboration, and networked communities along with intricate and substantially enhanced transportation ecosystems.

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