Real estate companies will need to learn about potential regulatory changes and adopt practices to comply with reporting requirements. Since more than 45% of survey respondents say they are awaiting guidance or an industry-driven response, industry associations can play a critical role by providing observations, information, and recommendations. CRE leaders should also be sure to focus on more than just the “E” in ESG—social and governance issues are also important.
Respondents were also closely following trends in tax regulation. With tax policies around the globe in flux, top concerns for the industry were increased tax rates, changes to transfer pricing/profit-sharing, and the automation of enforcements. CRE leaders can help prepare their organizations for upcoming tax changes by:
1) Increasing transparency into reporting and data requirements for automated regulatory enforcement in certain jurisdictions; and
2) Factoring in the tax implications of ESG initiatives. For qualifying activities, existing or soon-to-be enacted legislation could provide real estate organizations with tax benefits, such as tax credits.
Employee expectations have shifted and grown since the pandemic
Many geographies continue to face competitive talent markets. Employees are capitalizing on low unemployment rates, a rising wages environment, and more remote-working options. The pandemic also spurred population shifts—many people relocated when work-from-home arrangements became the norm. CRE companies should see the desire to work remotely as a long-term talent trend.
Understanding employee expectations will help CRE leaders recruit and retain talented people. More than 40% of respondents plan to bolster diversity, equity, and inclusion (DE&I) initiatives, add additional health and wellness benefits, and offer regular remote-working options. But only about a third (or fewer) say their firms are prioritizing measures such as workplace redesigns, implementing flexible schedules, and offering more career growth and skill development opportunities. All of these areas could help CRE firms enhance the talent experience.
Companies planning to curtail technology spending could miss out on opportunities to innovate and improve efficiency
Compared to our 2022 outlook results, more respondents plan to cut or cap technology spending as firms curb expenses with tempered revenue expectations. Many anticipate some level of technology cost-cutting at their companies, and fewer than half expect to see any increase at all, especially in Europe (figure 3). This is in marked contrast to last year’s survey results, where only 7% anticipated spending cuts and two-thirds expected their companies to increase spending going forward.