Real estate

How global demographics drive global real estate opportunities

Key takeaways
Economic and population growth

To identify potential opportunities, population trends must be understood alongside macroeconomic drivers.

Aging and dependency

An aging population means more medical office and life science properties, and a range of age-related residential options.

Global supply chain shifts

China’s rising labor costs and projected population declines could alter supply chains, pushing growth to other regions.

What factors will drive real estate investment opportunities, and where will they be? Follow the money and people! When economies and demographics shift, real estate opportunities emerge. This is the first in a series of articles on demographics and real estate. It covers the drivers of global demographics that are likely to generate several types of global real estate investment opportunities.

Here are some highlights from my paper, Follow the money — and the people.

Five demographic drivers

Five drivers of global demographic change are likely to stimulate real estate investment opportunities.

  1. Population versus wealth: Real estate opportunities arise from the combination of economic growth and population growth.
  2. Growth versus change: Slow global population growth in large economies means that many opportunities instead will be driven by shifts within those economies.
  3. Migration: Net migration usually reflects the seeking of opportunities and stability.
  4. Aging: Real estate needs will likely shift as dependency intensifies.
  5. Income: Wage and labor cost escalation has eroded China's former status as the world's leading low cost manufacturer, which is contributing to global supply chain diversification.


Real estate investment opportunities

Here are the types of investment opportunities that we expect for global real estate based on the drivers.

  • Wealth and migration together multiply opportunities
    Places with higher wealth tend to foster positive migration, which in turn drives more diverse investment opportunities.
  • Seniors are driving property demand in higher income economies
    Swelling senior population means surging demand for senior housing, medical office, and life science.
  • One roof, multiple generations
    Rising dependency, weakening affordability, and immigration could spur multigenerational housing in wealthier countries.
  • Live-work solutions
    Rising dependency of seniors requires workers to double as caregivers, reinforcing the need for work flexibility and hybrid work environments. This will likely reinforce the urbanization as work opportunities are concentrated within cities.
  • Housing market to experience less growth, more churn
    Expect home sales in advanced economies to be affected by competing trends — slower population growth rates will moderate the pace of home sales, whereas wealth transference from older seniors to younger generations may spur home sales and related purchasing.
  • New math means new configuration of global supply chains 
    China's labor cost escalation and population reduction are compelling a gradual yet imperative diversification of production activity to other countries.

Where we see real estate opportunities

While each driver is impactful in isolation, the interaction of these drivers produces a fuller range of potential real estate investment opportunities (see table below). This range takes on unique characteristics as the consideration of demographics narrows from the global level to the country level and down to the local or trade area level. Future papers in this series will look more deeply into demographic trends within regional and local geographies to see how they spur the potential for real estate investment opportunities.

Real estate opportunity Population vs. wealth Growth vs. change Migration Aging Income/wages
Wealth+ migration = more and diverse opportunities      
Needs of seniors will shape property demand        
Multi-generation housing demand to grow    
Live/work: Hybrid work reinforced; urbanization to persist  
Housing demand: Less growth, more churn    
China production to shift to East Asia and Mexico    

Read my complete analysis of how global demographics shape real estate investment opportunities in "Follow the money — and the people."

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