1. Cross-border transactions 

After almost two years of restricted travel, people are looking forward to freely moving across borders once again. While this is great news for airlines and hotel companies, it is also a very welcome development for real estate markets. Despite technological advancements, we believe that most investors will still prefer to visit the property before they commit to a transaction. We expect these prospective clients to re-enter the international property market and continue to look for opportunities which will fuel the market further. We expect that the European residential market will experience an outsized benefit due to a significant part of the European transactions involving international investors.  

2. Climate awareness

At HIC, we believe that environmental considerations will become one of the most important trends in the 2022 real estate market. One important initiative is the Race to Zero Campaign, which has brought together over 700 cities worldwide to work together towards achieving net zero carbon emissions by 2050. To that end, real estate assets will play a critical role in getting us there by ensuring where we live and work are a part of the solution. One aspect developers should consider is concrete. Concrete is the second most consumed substance in the world and it also accounts for 7% of the world’s emissions. Various companies and institutions have already started to make a positive impact on the real estate industry – so that the industry can continue to grow and improve the way in which we live while simultaneously working towards net zero by 2050. ETH Zurich is leading the way with a recent development of a novel 3D printing solution that allows them to produce concrete slabs that are lighter, better insulated and use 70% less materials than traditional concrete. We are excited to see how the market will develop further in 2022 as consumers, corporations and governments alike demand more sustainable concrete.

3. Adaptive Reuse

Adaptive reuse is the process of reusing an existing real estate asset for a different purpose than it was originally built for. It can range from office spaces being converted into blocks of residential flats, or even to an old factory being converted into a state-of-the-art concert hall. This trend has the potential to serve an important role on the real estate market with two implications. Adaptive reuse uses less energy, less water and generally fewer building materials. Besides being good for the environment, adaptive reuse can also offer significant financial benefits for a developer.

To better understand adaptive reuse and how it can affect the market it’s important to consider how work from home has impacted the real estate market. By now, it’s quite clear that remote work is here to stay. This trend has a dual impact on the real estate market. On the commercial side, demand for office space has slumped due to the pandemic and the rise of working from home. Retail premises such as shops and restaurants have adjusted their hours and transitioned into delivery options. In the residential market, people now spend more time at home and therefore require more space for the home office and, ideally, an outdoor space or a balcony. Adaptive reuse can address both of these changes. One particularly impressive project was a conversion of 1 Wall Street in New York City, which converted a million square feet of office space into residential use.

We will be keeping a close eye on these trends, as well as watching for those that arise over the course of 2022. Our goal is to keep you informed and provide you with actionable intelligence so that changes in the market can be considered opportunities, rather than risks. Stay tuned for the next Real Estate Newsletter coming out in February 2022.