The real estate sector is facing disruption due to three primary forces behind it: technology, demographics and globalization. These forces have been there for many years, they are evolving and they are interacting with one another, making real estate not an exception as organizations and industries of all types find themselves facing disruption as well.
Technology has a tremendous impact on various industries including real estate. E-commerce has impacted in-store shopping which resulted in closures of many retail stores. Virtual reality is one of the new technologies that could transform physical stores into experiential showrooms. Similarly, labor forces being replaced by robots will have a huge impact on manufacturing facilities. Not only that, 3D printing will also have a huge impact on not needing actual labor force for construction.
Demographic and preferences together with technological advancements also affects the real estate market. In many societies that are facing rapidly aging populations, the change of real estate preferences and needs change as well. For instance, new generations will demand more of urban design rather than demanding general and specialized health care facilities that are required by aging populations.
Globalization has helped real estate to maintain stabilization through diversification in terms of financing, which also allows developers to help global clients achieve their expansion strategies. In addition, globalization has a long-term effect which is rapid urbanization as it is expected that 2.5 billion people living in urban areas will be part of the global population between 2015 and 2050.
Disruption may be faced in all industries but the real estate industry has unique dynamics, making it a serious challenge. Planning, delivering, and managing real estate properties requires a long-term vision, which is not easy to establish in a world that is facing rapid changes. Therefore, the real estate industry is in a position that needs capable leaders to shape the real estate market and have the ability to drive future demand.