In November 2022, the global population reached eight billion. In the same year, India, with 1.4 billion people, overtook China as the world’s most populous country. Over the next 10 years, India’s population is set to be the fastest growing in the world, adding 100 million people. China’s population, meanwhile, is expected to tip into long term decline, having fallen last year for the first time in 60 years.
This shift is emblematic of wider demographic changes globally: there are signs that the rate of population growth is slowing. While that’s good for the planet, it also poses a number of challenges that will be reflected in the real estate market.
An ageing world
The developed world is ageing, as are China and many countries in South America and the Middle East. The balance of population growth is now shifting to Asia and Africa.
Larger, older populations also mean more single-person households, creating a need for smaller homes. Technology is set to play a vital role in helping people to stay in their homes for longer and improve healthcare for elderly people.
Flexible rental models and new types of housing, such as unassisted senior living, can free up real estate for younger generations, while mitigating loneliness among the elderly.
Urbanisation and population
Today, about 55 per cent of the world’s population live in towns and cities, a trend expected to increase to 68 per cent by 2050, with most of the growth occurring in developing markets.
Increased urbanisation has also compounded growing emphasis on ESG factors among investors and the general public. While occupying less than two per cent of the world’s total land area, cities produce 80 per cent of gross domestic product, but also 70 per cent of carbon emissions.
Demographic change will shape the future demand for real estate across the globe. While big cities, particularly in the developing world, will drive growth, smaller, more vibrant cities, such as Bristol in the UK and Austin and Denver in the US, will continue to attract younger populations through their strong knowledge economies and high quality-of-life ratings.
Global demographics in 2033
Dominant age group by country, and top ‘youthful’ and ‘aged’ cities by share of population in 2033
Source: Savills Research using Oxford Economics, note: top 100 cities based on those with GDP per capita greater than $25,000 in 2033. Selected top 100 cities labelled.
The digital generation
Generation Z – those born between 1997 and 2012 – is coming of age and has become the largest generation on Earth.
This has profound implications for real estate and cities. The most in-demand hubs are changing, as the mix of uses for real estate evolves and becomes more fluid.
With their digital savviness, these youthful, global citizens are more mobile than previous generations, fuelling demand for student housing in the most popular education markets of the US, the UK and Australia.
Drawn to cities and less inclined to drive a car out of environmental concerns, Generation Z may provide the tipping point for 15-minute cities. To appeal to this cohort, property managers need to be environmentally aware and offer personalised, seamless online or app-based services.
New working hybrid
Generation Z tends to seek a good work-life balance, with a mixture of hybrid or remote working. But they also prize the sense of community that comes from being in the workplace. In contrast, older generations often favour working at home without the distractions of the office.
In ageing societies with shrinking workforces, it is important to involve all age groups in the workplace. Flexible working can help keep older people in the workforce when they may have caring responsibilities for parents or grandchildren, or declining health. Extensive childcare, such as that practised in Sweden, may also boost labour market participation.
Responding to these changing, and often sometimes contradictory, trends will characterise the real estate market. Looking ahead, the watch word will be flexibility.
Proportion of hybrid or remote roles advertised by seniority
Source: Savills Research using LinkedIn
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