Reimagining Real Estate 2024

Liveability addressed healthy, human-centric and smart spaces, in part capturing a heightened focus on well-being during the pandemic. Sustainability addressed building decarbonization and energy efficiency, with a focus on reducing whole life-cycle carbon emissions. Resilience went well beyond any narrow focus on physical climate risk to include risks ranging from functional and competitive obsolescence to public health shocks. The discussion of affordability reflected the pervasiveness of housing shortages in urban centres around the world and the pernicious impact of high housing costs on social and economic mobility, health and well-being, and other outcomes. Progress towards the frameworks’ stated goals would not be automatic. It also articulated a clear set of enablers, relevant across the public and private sectors and across buildings and whole communities. These enablers included guidance in traditional areas such as stakeholder engagement and investment in talent across the spectrum of real estate’s workforce needs. They also included a focus on asset monetization, transparency and innovative but prudent financing, harking back to lessons learned from the 2008 global financial crisis. Years before artificial intelligence (AI) and large language models emerged into the everyday vocabulary of real estate industry professionals, the framework anticipated a growing role for technology and innovation. The original framework did not anticipate every feature of the global recovery from the COVID-19 pandemic, nor could it have. In particular, the dramatic shift in the capital markets environment was not among the prospective headwinds catalogued by decision-makers in the public or private spheres at the time. Similarly, the challenges associated with reimagining and recapitalizing spaces following a historically abrupt increase in the cost of financing were also unforeseen. Additionally, the post-COVID-19 pandemic era has been marked by escalating geopolitical tensions. Given the fundamental dependency of real estate asset values on their specific locations, governance changes or outright conflicts can have a profound impact on returns. Supply chain breakages, ever- more-observable climate pressures, reliance on energy imports, global migration patterns and other factors have motivated states to pursue more protectionist or even nationalist policies. In some cases, investment decisions are increasingly motivated by political considerations in areas ranging from capital allocations to the de-prioritization of sustainability criteria in investment evaluation. Over four years from the start of the COVID-19 pandemic, real estate market participants have a better sense of the scope, scale and speed of disruption to traditional real estate investment. However, uncertainty regarding the future remains a fixed feature of the market, underscoring the importance of resilience – and adaptability – as one of the framework’s core features. It reflects the prescience of the original framework’s authors that the vision at the heart of this report is the same. The focus on the key pillars of liveability, sustainability, resilience and affordability captures that these goals transcend the cyclical features of the market or any particular shock. It also reflects that, as the industry has contended with the immediate challenges of a changed capital markets environment and rapidly evolving demand preferences, only modest progress has often been made towards its goals. Uncertainty regarding the future remains a fixed feature of the market, underscoring the importance of resilience – and adaptability. Reimagining Real Estate: A Framework for the Future 6