Housing, residential real estate development & management, and housing markets in general are subject to a series of trends and shifts that, combined, result in a system shift redefining the industry and the market alike, as well as the business of regulating that market. The first trend, a shift in itself, is what has come to be called the Fourth Industrial Revolution (4IR).
Digitalization and 4IR are impacting society in the very ways and patterns it is organized. Distributed, networked designs underpin our communications, our economies, our decision- making models and how we produce value, in every sense of the word. As the world moves away from industrial age patterns of centralized organization, digitalization has paved the way for patterns of networkedness and distributed designs.
Each and every segment of our economy has been or is being impacted to a smaller or larger extent: old centralized modes of ownership, production and distribution are making way for As a Service models that emphasize usage rather than ownership. Peer culture, platform economics, data as an asset and on- demand delivery have become additional hallmarks of a this new revolution that caters for the individual as opposed to the mass median middle.
As margins tumble in old paradigm models, an ‘upgrade’ is taking place on value and where margins are perceived to be in an overall value chain: from a ‘per minute click’ of connectivity on telco networks to great online content and security, from a car engine to a seamless driving experience, or from a light bulb to an overall integrated light service and experience. The music industry and retail have proved to be first movers, real estate development & housing, if it can be labelled an industry, is still lagging. But the first hallmarks of the shift are clear: platform economics have facilitated the arrival of Airbnb and the likes.
Shared living spaces are becoming fashionable. Many developers are open to more tailored, customer centric ways of developing, and plenty of housing corporations discover how community and experience are assets as important to a successful housing operation as is physical habitable space with a front door itself. Moreover, younger generations have grown accustomed to seeing needs met ‘as a service’ as opposed to owning things: ownership no longer king in underpinning well-being. Other trends beyond digitalization and the 4 th Industrial Revolution apply. The immediate second on line is the increased mobility of people: entrepreneurs, work force, students, to name just a few high level categories, have grown ever more mobile and ever more international. The expectation for an individual or family to be tied to any one specific physical home for many years if not decades has been decreasing.
Third, environmental challenges and climate change set new demands on how we build, operate and live in residential property. Fourth, cities continue to grow in size which generally means more pressure per square feet on market offerings and an enhanced need for micro-living type of services. Fifth, the Covid-19 Pandemic has triggered new demands on hygiene and health to physical environments that are unlikely to disappear once the virus in question has been adequately dealt with. Sixth, all the above trends have given rise to a fresh re-assessment as to how we connect people back to green, nature and locally grown food: urban agriculture is only one of its hallmarks.
Many other trends and shifts can be added to this narrative. But the overall conclusion is apparent: the industry of housing is subject to system-level change. Moreover, most core actors to this industry come under-prepared. What will be required is an investment in accelerated innovation strategies to affectively meet the housing challenges of this decade and the context within which the industry operates. New business models, new skill sets, the art of design thinking, new regulatory models, new housing propositions: all of it will be required at an accelerated pace.
Further, these changes are occurring, by and large, across continents. Cultures and economies differ, yet the larger system shifts apply to all. Similar lessons are being learned simultaneously in different parts of the worlds. Core stakeholders such as city governments, real estate developers, architects, city planners, housing corporations, technology providers as well as banks have a shared interest to share. To exchange best practices, build partnerships, and peer review plans, policies and investments in order to collectively frame the future of housing.
Change= considers itself an agent of disruptive change. Its design principles are well aligned with the trends described above. The future of housing has just started, and Change= looks forward to find itself in the middle of an industry-wide transformation.
Professor of Practice Thunderbird School of Global management (Arizona State University), VP at Cities Today Institute and author of “A New Digital Deal” – www.anewdigitaldeal.com