The customer is always right: the future of real estate | Property Matter
The British Property Federation Annual Conference on 15 June – ‘Through the Looking Glass: The Future of Real Estate’ – identified some long-term trends that could influence how real estate has to develop to meet customer needs in future.
Consumer Strategist, Futurist and Founder of the Next Big Thing, William Higham, identified 5 key trends, which were explored in the panel discussions:
- Going mobile – we are already seeing mobile phones being used for a range of functions other than simply keeping in touch. 55% of e-commerce in the UK is currently completed via mobile device and they can act as tickets/boarding passes/wallets/door keys. Their functionality (and our reliance on them) will only increase.
- Bricks vs. Clicks – above all, customers want convenience. This isn’t the end of shops (81% of under-40s say shops are important) but their function may change. The meteoric rise of the experience economy (78% of millennials prefer to spend on experiences rather than goods) will drive the changing face of developments, with multi-use “destination” developments being sought after.
- Shared Spaces – customers are less focussed on owning assets and happier to share, both cars and houses. Autonomous vehicles are going to have a major impact on city planning, with ample opportunity to redevelop space currently used for car parking. 3-generation households are on the increase and renting, rather than buying, property is on the up.
- Work Space – customers want flexibility, with the option to work from home but without abandoning the traditional office. The social aspects of coming to work cannot be underestimated. Office developments will have to adapt to meet changing customer needs. In particular, there is a shift away from long leases to short-term, more flexible models. Multi-let properties could prove more profitable to landlords than bespoke tenant buildings and there is now a need to convince valuers/lenders of this. Student housing is a fantastic example of a very profitable investment based around short term lets. From a different perspective, there is 50% chance that a baby born now will live to 104. Therefore, the model of our 3-stage working life (education/work/retirement) will have to evolve, abandoning the idea of a “job for life” with retraining becoming commonplace. The move towards AI and technology to replace menial tasks will mean jobs (and workers) will also have to adapt.
- Back to nature – a sense of community is increasingly important for customers and there is a drive for more green space in cities. When surveyed, the majority of people say they want to live in market towns – but do these towns have the necessary facilities and infrastructure to cope?
And William Higham’s four recommendations for property developers:
- Build more convenient
- Build more connected
- Build more compelling
- Build more communal
A second panel discussion emphasised the need for vision, direction and leadership to improve productivity levels in property development and cut through the current bureaucracy. A cohesive plan is required to dissuade interested parties from waiting for someone else to do it. The construction industry needs to evolve in order to attract and retain the best, most diverse talent and embrace technology to speed up transactions and developments.
The spectre of Brexit was raised by several panellists and in the keynote speech, Sir Peter Westmacott spoke of the current period of unprecedented uncertainty. The consensus was that the Government had to take a pragmatic, collaborative approach now to achieve the best possible deal for the UK and key to this will be ensuring EU nationals are permitted to remain in the UK.
Clearly, in future the customer will be king and their evolving needs for personal and working space, which is above all convenient, will determine how real estate develops in the coming years.