What will residential real estate look like in 2030?

During these times, urban residents, including myself, were ready to flee the cities and establish roots in larger and more rural spaces.

According to a study conducted by the OECD, Covid critically modified the way people view their own homes. The study had predicted that the experience likely changed housing preferences: with many residents wanting more space, notably to accommodate teleworking, even if it implied living further away. Simultaneously, the value of proximity to offices and consumer services would diminish amid the rise of teleworking and online services.

I believe things didn't turn out quite as they thought.

When predicting the future of residential real estate in 2030, we need to acknowledge that the market trends are now taking a turn for the better.

Short after the pandemic was over, in 2022, the global residential real estate market size had finally reached an impressive USD 8,842.80 billion, with projections suggesting a remarkable surge to USD 19,525.11 billion by 2031, which reflects a robust CAGR of 9.20% (2023-2031).

The way I see it, the ever-increasing urbanization trend plays a crucial role, with 55% of the world's population (4.2 billion) residing in cities. Projections further indicate that this urban population will double by 2050, presenting both challenges and opportunities for the residential real estate sector.

As we delve deeper into the trends that will shape the residential real estate landscape in 2030, I must highlight the role of various other factors that have brought us to this point. Digital acceleration and the rise of green residential spaces are identified as significant drivers of market demand in the residential real estate industry.

With these foundations laid, I can begin to break down my predictions for the industry trends that will shape the residential real estate industry in 2030.

Market Trends That Will Shape Residential Real Estate in 2030

1. Urban Growth in Emerging Nations & Overconsumption in Wealthy Countries

I need to underline that there is a dichotomy between urbanization in developing nations and overconsumption challenges in developed countries which significantly influences the residential real estate market.

Although post-pandemic times made me believe the demise of big cities, also known as the urban doom loop, the reality is not as dark as it seems. A detailed model created by Fortune demonstrates that the future demand in "superstar cities" worldwide reveals a substantial reduction in office and retail space demand but a stable (however slow) growth in the demand for residential spaces.

The analysis shows that the demand for office spaces will drop by up to 20% due to the growth of hybrid and remote work. Moreover, fewer consumers are willing to shop at brick-and-mortar stores which will lead the demand for retail space to fall by 22% in 2030 compared to what it was in 2019.

When it comes to residential real estate, demand will suffer less.

According to the analysis, superstar cities will enjoy a higher demand in 2030 than they had in 2019.

Nonetheless, the demand will be lower than what it would have been without the pandemic.

It has to be noted that developed countries will also face more saturation in large cities due to overpopulation, pollution, and economic constraints. I believe this overconsumption will be a critical reason for the slow expansion of the residential real estate market.

Conversely, in nations like Brazil, Argentina, South Africa, India, and China, rapid urbanization fuels migration to major cities. This will result in increased demand for residential real estate. The way I see it, urbanization could also offer numerous benefits such as economies of scale and network effects for emerging nations – if done correctly.

However, I do have to highlight that there can also be challenges with urbanization in developing countries. Unplanned and rapid urbanization poses substantial risks which include increased social instability, threats to critical infrastructure, shortages of vital resources, and the spread of diseases.

Furthermore, rapid urbanization often leads to widespread poverty, with almost one-third of urban dwellers living in slums, highlighting the urgent need for holistic urban planning and governance to address interconnected risks.

2. Digital Acceleration

I strongly believe that the residential real estate industry is undergoing a digital revolution, and the movement is stronger now than ever. Online platforms and emerging technologies are reshaping how properties are marketed, sold, and managed. Companies in the residential real estate market are embracing these changes to maintain a competitive edge. Automated listing entries and enhanced data value are becoming key features of modern real estate operations.

Millennials, who accounted for 55% of new home buyers in 2023, are driving changes in how housing is sought and sold. This leads me to believe that the industry will be adapting by adopting technologically oriented business models to cater to the preferences of this tech-savvy generation.

The Emerging Trends in Real Estate Europe 2021 report suggests that 78% of respondents believe the use of technologies in real estate companies will trend upward in the next three to five years. The integration of AI in the proptech industry generates vast amounts of data, empowering analyses that provide insights into current trends, risk assessments, and a better understanding of client needs.

The following are a few of the successful proptech companies that exemplify the transformative power digital acceleration is having on the residential real estate industry:

• HousingAnywhere: The company has changed the way people find accommodation in unfamiliar cities by providing them with an online marketplace connecting international students and young professionals with rental properties. They are now present in over 500 global cities.
• Opendoor: The company simplified home selling by introducing a streamlined process allowing sellers to request offers online, eliminating traditional showings, and providing transparent transactions for buyers.
• Spaceflow: The company enhanced the resident experience by developing an app that connected residents with building services, amenities, and property management. This improved communication, streamlined service requests, and fostered community.
• Zillow: The company empowered homebuyers with data by granting them access to accurate and up-to-date information about homes for sale, market trends, and property values in a comprehensive platform.
• REalyse: The company offers a platform aggregating and analyzing property data, aiding investors in making informed decisions, optimizing their portfolios, and minimizing risks.

3. Sustainable Design

The market trends in residential real estate are also increasingly leaning towards sustainability, driven by a shift in focus towards environmental, social, and governance (ESG) principles and advancements in proptech. As of 2022, real estate was identified as a major contributor to global carbon dioxide emissions, which I believe prompted a change in the industry's approach.

Government regulations and incentives are driving demand for eco-friendly practices such as solar panels, insulation, and water-saving technologies. Sustainable design practices, including Building Information Modeling (BIM) and the use of eco-friendly building materials, are becoming more prevalent in the industry.

Furthermore, to meet these emerging standards, real estate businesses are turning to sustainable solutions facilitated by proptech. Proptech integrates cloud applications, real-time sensors, and data analysis providing insights into energy usage, infrastructure, and stakeholder management.

Some ways that the residential real estate industry is leveraging proptech for sustainable solutions include the following:

• Lowering Energy Consumption: Smart home technology enables homeowners to monitor and control energy use, reducing their carbon footprint.
• Streamlining Resource Management: Optimizing resource usage by empowering managers to track and manage waste, water, and air quality.
• Powering Smart Urban Planning: Proptech helps policymakers create sustainable cities by offering insights into population density, urban dynamics, and infrastructure needs.
• Promoting Accountability and Transparency: Enhancing transparency through blockchain integration and comprehensive data on energy performance and sustainability metrics.
• Sustainable Property Maintenance: Using software to monitor building data and equipment conditions, facilitating proactive maintenance to ensure optimal efficiency.
• Tracking and Managing Water Usage and Air Quality: Proptech solutions integrated with IoT sensors streamline water management and provide real-time notifications for various environmental metrics.

Looking Towards the Future

As we envision residential real estate in 2030, it is clear that the sector is on a trajectory embracing technological change.

The convergence of urban growth, digital acceleration, and sustainable design practices will redefine how we approach the residential real estate industry.

AI-powered, data-driven technologies and proptech innovations will play a pivotal role in shaping the future.

Understanding and adapting to these trends will be crucial for success in the future residential real estate market. Bold scenarios await those who embrace digital acceleration, sustainable practices, and emerging technologies. It will be imperative for industry players to stay ahead of the curve, leveraging the opportunities presented by these market trends for a prosperous future.