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Demographics

The Famous Five: The five demographic megatrends that real estate cannot ignore

Alice Breheny
Head of Research, Real Estate
Buildings at night

In our inaugural ‘megatrends’ report, we outline why the real estate industry needs to be more focused on the bigger picture trends and insights that are materialising – those that will impact the future use and demand for real estate globally over years and decades.
 
We highlight five demographic megatrends that we believe will have the greatest impact on real estate. 

The Famous Five
  1. Urbanisation - Asia Pacific's urban population will grow by a staggering 825 million people in the 20 years to 2030; that's more than twice the current total population of the United States.
  2. Shift of economic power from the West - By 2030, Asia Pacific's contribution to global output will be larger than Europe and North America combined.
  3. The rise of the global middle class - A truly global middle class is emerging - the number of middle and high-income households globally will more than double from 554 million in 2010 to 1,121 million in 2030.
  4. Ageing demographics - An unprecedented and widespread aging of population is taking place globally; the proportion of elderly (over the age of 64) is expected to increase by 50%, from 8% of total population in 2010 to 12% in 2030.
  5. Technology - Technology has not only significantly changed the way we live, work and communicate, but has helped create an interconnected global 'village'. With further technological development, the world will become even better connected.

We are committed to capturing long-term, structural changes in both occupational demand and capital flows, creating sustainable real estate products relevant to both operators and investors, and future proofing our clients’ interests. Megatrends such as the ones highlighted, should be used in both defensive and offensive strategies. On the defensive side, investors should be mindful of the impact they may have on the long-term viability and relevance of markets, sectors and assets. At the same time, investors should be on the offensive to seek out and exploit those trends that will create new opportunities or result in long-term structural uplift in rents or pricing.

Operators in all sectors will be monitoring trends and opportunities in emerging markets, and smart investors should be too. Having identified the most compelling opportunities, the key to investor success will lie in execution. Understanding local market dynamics is key. As such, our top-down analysis is focused on cities rather than countries. Although megatrends by definition are multi-jurisdictional, their impacts can be quite local in nature. As such, our top-down analysis is focused on cities rather than countries.

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