Do you ever wonder what the future of property looks like? Someone might have asked this question roughly 60 years ago when the City of Detroit in the United States of America, was at its very best. Whatever the property professionals’ answers were at that time, I am almost certain that, what is happening today was not what they had in mind.
A report from the New York Times and the RT news states in 2012 the population was at around 701 000, a drop from about 1,8million in 1950. There are 70 000 abandoned buildings which are reportedly turning into dumping sites and crime capitals, making Detroit the most dangerous city in that country with a crime rate of 2 137 per 100 000 residents.
That very same question might have been asked here in South Africa in the 1970s when Hillbrow was the place that many people yearned to reside in. Whatever answer the property professionals and owners had, the current state of that area is probably not what they anticipated. Hillbrow is currently one of the places in South Africa which is famous for its high poverty, crime and unemployment rates.
Considering the more permanent attributes or properties of real estate, it is necessary to have some long perspective. While it may be difficult to anticipate every possible future outcome, the above examples prove that it is clearly worth it to invest some time in assessing the long term possibilities. Addressing some of these possibilities will certainly reduce the chances of such failures in the future.
Although most of the real estate properties in South Africa have not gone through the extremes as the ones in the Detroit or Hillbrow examples, they have had threats of their own. For example, older buildings do not possess the relatively high adaptive qualities that modern buildings have, since such modern buildings have movables partitions and other things of that sort, to which global influencing companies like Google and Yahoo prefer.
Using this logic, and taking into consideration the lessons we have learnt from the past, we can ask the very same question again today. What do you think the future for real estate looks like looks like?
Obviously people have different responses and it can be a debate that can go on for days. However if I were to give it try, in my opinion the answer to this question today lies mainly within the micro-economic issues, environmental and energy issues and lastly technological advancements. The micro-economic issues and technological advancements are huge issues on their own and will be discussed on another day. For today the focus will be on the environmental and energy issues. While I acknowledge that market leaders in today’s economy are already addressing some of these issues, the rest of the population is still not yet as concerned as it should be. Nevertheless it’s only a matter of time.
Energy: Compared to the rest of the continent, South Africa’s energy issues are still bearable. However the price increases of electricity and fuel, can be regarded as a warning sign for the property industry. This can be addressed at many levels. Firstly the new buildings have to be more energy efficient. The buildings that are designed in such a way that their functionality depends on high energy consumption other than passive energy will suffer and prove costly in the future. A possible alternative might be that these buildings might need to adapt and create their own energy to sustain their current extra necessities.
Secondly, the issue of property location is going to be much more critical than it is today. While today’s local economy can still afford to embrace urban sprawl, rising costs are going to significantly reduce the desirability of properties located in areas with limited economic opportunities. This can only be avoided if the government and local municipalities somehow manages to convince the greater public to depend more on public transport than on personal vehicles.
Environmental sustainability issues: this issue in my opinion is at centre of the threats or opportunities for the property industry regardless of whether it’s retail, residential, office, industrial or commercial. A good example would be water stress or shortage. The Green Building council of South Africa states that the built environment consumes 12% of the fresh water in the South Africa, to which a significant part of it is wasted. At present people are not very concerned with this because water in cities is still available. According to a DBSA report in 2009, South Africa’s fresh water supply will not be under threat until the late 2020s or a little beyond, provided water management measures are put in place. What this means for the property industry is that, when water shortages become a reality in our cities markets are going to be very conscious on where fresh water is being wasted meaning that properties with designs which cannot adjust to use of alternatives other than fresh water will be in deep legal issues.
But then again, these are just my opinions. What do you think the property industry will be like in the future?
About the Author
Farai is a Property Studies Honours student at the University of Cape Town.
The views expressed in this article are the author’s own and do not necessarily represent the views of Property Wheel