2021 started with taking stock of the atypical 2020 a year that made a strong impact on economic activity. It gave rise to numerous challenges in the real estate sector. All thanks to the COVID-19 pandemic! But how exactly did the pandemic affect real estate? What real estate trends emerged as a result of it? With this blog, we will dive deep into top Europe real estate trends to help you face the changing market demands.
Trends, be it trends in real estate or any other industry, emerge out of necessity and evolving market dynamics. Who would have predicted before the pandemic about the confinement, mobility restrictions, and postponed vacations?
In one way or the other, the coronavirus pandemic has changed everyone's way of life. And no one was immune to it, not even the real estate market. Here is how the dynamics of real estate changed because of the pandemic:
It changed our housing needs since we had to spend a lot of time at home during the pandemic.
Now, customers rethink their needs and requirements before buying a home, bringing a lot of uncertainty to the process.
With changing needs, there come new challenges on the way.
Here are some top Europe real estate trends that made their way into the market to address these challenges that arose with changing market and customer needs:
The capital is still abundant but it’s paused for now
The COVID-19 pandemic put economies on pause, lowering business confidence for 2021. Organizations in various industries expected and still expect a fall in profits. Not only this, but the response of governments across the world to COVID-19 was equally daunting.
Governments introduced mitigation measures, such as tax and insolvency deferrals, to stave off the worst effects of the pandemic. It instigated deferrals or moratoriums on rent collection, etc. Hence, a big part of the capital is now awaiting deployment.
There has been a shift in favor of European real estate domestic markets
For almost a decade now, globalization has been acting as a roadblock in real estate since it brings an expectation of high and rising levels of cross-border investment. But now, this is changing. Investors are increasingly turning to domestic markets instead of looking at other options overseas.
European investors will play a bigger role in their domestic markets than ever. That’s because it is extremely difficult to do adequate due diligence on properties overseas.
Now, it’s all about repurposing the existing assets
Trends in real estate change, and so do the priorities of the investors. Investors are now focusing on repurposing their assets, i.e., whatever you invest in can be repositioned and repurposed. This shift in priority comes as a result of the current uncertainty amongst occupiers/ Now, they are more concerned about how to use the existing space.
For instance, office space demands were negligent during the pandemic, and even now, it is not a hundred percent. Hence, real estate must consider new, quick ways of delivering or repurposing assets while improving their operational resilience and flexibility.
For instance, office space demands were negligent during the pandemic, and even now, it is not a hundred percent. Hence, real estate must consider new, quick ways of delivering or repurposing assets while improving their operational resilience and flexibility.
Sustainability and ESG are now becoming an integral part of real estate strategy
ESG and sustainability are playing an important role in boosting the overall attractiveness and earning potential of the existing real estate and buildings in the blueprints stage. Sustainability, ESG, responsible investing, and complementary strategies are now seen as a fully integrated part of traditional investment management.
Investors and tenants both have been advocates for energy efficiency, construction carbon emissions, and climate adaption. The pandemic has furthered this impetus, making retail and office assets more sustainable.
Moreover, the shift towards net-zero is equally responsible for enhancing the attractiveness of buildings. They are also putting a lot of effort into increasing their earning potential by being as self-sufficient as possible.
For instance, generating their power or processing their wastewater is now a strategic aspect in the European real estate market. These areas are deploying technology at a rapid pace, and it is going to rise in the coming years.
Leveraging technology is one of the vital real estate trends in Europe
The fascination of real estate developments and hard assets is on one side. Investors are now more drawn towards the rising use of technology in real estate. For example, they are considering how to optimize construction, property management, and building interactions using modern technology.
In the post-COVID era, buildings with futuristic features, such as touchless technology and intelligent air quality monitoring, are waiting to fetch a premium from investors and tenants.
Technologies like big data analytics and artificial intelligence (AI) are disrupting the way buildings are monitored and maintained. They are also going to play a role in shaping the way properties will be constructed.
New systems relying on the latest and cutting-edge technologies are streamlining and simplifying building processes for on-site construction.
For example, quality documentation and reporting via real-time AI insights are helping make timely and efficient decisions. that benefit everyone. That is just one example of how new technology is taking over the real estate industry. More like these are waiting for investors.
However, they must keep an eye on new technological possibilities and those harnessing them to get an edge over others.
Conclusion
Real estate trends are temporary, but their impact can be permanent. People perceive real estate as one of the few investment asset classes using which one can generate acceptable returns at a time of low or negative interest rates. But one must keep up with what is happening in the industry, i.e., the trends in real estate.
It becomes even crucial when the pandemic has forced millions of us to work from home and close retail stores. Those who ride the wave of disruption will succeed; those who complain about the rapidly changing marketplace will be left behind to complain. Make a choice wisely.