Housing of the Future
growth | Business Development | April 2024
Content we will read:
Future Housing | Developments in the Construction Industry
Reading time: 5 minutes
Housing of the Future
Think of the word home, and you may conjure up an image of a cozy bungalow, high-rise condo, or tidy garden apartment.
But the concept of a home is changing, and so is the way that homes are constructed. The abode that people equate with comfort, safety, and family is being transformed into something new by a confluence of factors. Among them are population growth, a shortage of affordable housing and a construction industry that’s in the middle of a technology revolution.
Around the world, the industry is building new forms of housing that are affordable, shared, ecofriendly, flexible, stylish, or healthy. The indicators of future demand suggest that the portion of new units represented by futuristic housing forms will continue to increase over the next dozen years.
the industry is building new forms of housing that are affordable, shared, ecofriendly, flexible, stylish, or healthy.
It’s not a given, however, that the construction industry can provide the types of housing that people will want in the future. For that to happen, building owners, real estate developers , contractors, and building materials manufacturers must transform the ways they do business. Among other things, they must act early to secure property in desirable areas and use modern construction and building technologies to provide the types of dwelling units that people want to live in. They will also need to use digital tools for just about all their tasks, including to obtain financing and to improve communications with end customers. If they manage to accomplish this, then they may retain or advance their current competitive standing. Otherwise, they risk being left behind.
consumer trends influence where and how people want to live.
Urbanization.
People continue to migrate to cities, increasing urban density and the need for compact living quarters. According to statistics, by the 1990 s, 75% of Iranians lived in cities; and this trend is predicted to increase to about 85% by 1430.
Demographic Changes.
Family sizes are shrinking, and the world’s population is aging, increasing interest in living spaces that are either smaller or larger than are typical today. By 2030, 43% of households worldwide will consist of just one or two people, increasing demand for smaller living quarters.
Affordability.
Rent increases that continue to outstrip wages, along with other factors, have contributed to affordable-housing shortages around the globe. To combat the issue, cities have approved such measures as inclusionary up-zoning, where a portion of new buildings in a given area are allocated to affordable housing. They’ve also used infill development, which targets vacant or underused urban areas for residential housing.
Digital Economy.
As the economy becomes more digital, what people look for in a house is changing. More than half of the world’s population now has internet access, and in developed countries, 65% of millennials and Generation Z interact with each other more through digital means than they do in person. Such trends are increasing interest in remote work, home offices, smart homes, and shared living, among other things.
To Stay Competitive, Industry Players Must Adjust
To prepare for these shifts in the housing market, construction industry stakeholders must understand what the changes mean for their existing operations and figure out how to adapt. It is especially important for established companies to make adjustments sooner rather than later in order to retain market share and address new forms of competition. Ultimately, a company’s specific actions will depend on its industry segment and specific circumstances.
Property Owners.
Property owners have to own real estate in locations where people want to be. With more of the world’s population migrating to big cities, that means offering housing units in premium urban locations and suburban hubs.
Property owners also should aim to de-emphasize midsize units and acquire the smaller and larger units that are expected to become more popular. To stay in step with the sharing economy, they should offer or expand shared spaces and communal living services, including coliving spaces and spaces for community-building activities.
Finally, they must use digital tools along the entire value chain. For example, they can incorporate virtual reality into end-consumer marketing programs or use smart sensors in maintenance and facility management systems to increase efficiency.
Real Estate Developers.
Because urbanization will make acquiring desirable land in popular city settings more difficult, real estate developers must find and secure ideal locations as early as possible to beat competitors. Developers also can buy second-tier or suburban locations and collaborate with local authorities or other partners to upgrade transportation and infrastructure in order to make the areas as appealing to potential residents as the housing options in high-profile neighborhoods.
What’s more, now that crowdfunding is starting to take off, new sources of financing in a variety of industries are emerging, including in construction. Developers can gain access to alternative financing sources by using new types of crowdfunding platforms that let individuals invest in real estate.
The disintermediation that the digital economy has created has made customers comfortable with engaging directly with the proprietors of the things they buy. Developers can capitalize on this trend and use digital tools, such as virtual reality, to make it easy for customers to learn what they have to offer.
Contractors.
A global construction industry labor shortage is not expected to improve any time soon. To deal with a prolonged scarcity of skilled labor, contractors must figure out how to boost productivity with existing labor and resources. For example, they can adopt certain construction methods, such as prefabrication, and use data-based technologies, such as building information modeling, to operate more efficiently.
Moreover, if contractors opt to build affordable housing, they must find ways to mitigate the associated cost pressures. Toward that end, they can promote industry-wide standardization, offsite production, supply chain coordination, and lean approaches—all of which help achieve higher productivity while increasing project quality.
Building Materials Manufacturers.
Companies that make building materials must be ready to respond to increased demand for customization and new functions. One way they can prepare is to sell state-of-the-art materials that can be integrated into overall solutions. For example, they could sell energy-producing glass products, translucent wood, or self-healing concrete to building contractors. To mitigate any risks associated with jumping into new products early on, building materials manufacturers can monitor trends, bolster their ability to customize, and fund R&D in targeted areas.
Wrapping it up
Homes will always have walls and doors, ceilings and floors. But what those materials are made of, where they’re made, how they’re installed, where they’re situated, and who lives within the spaces that they create will change. The entire concept of housing is evolving—and the construction and building industry needs to evolve, too. Industry stakeholders will need to respond to the challenges that demand for new housing forms will create through planning, ingenuity, investing in R&D, and collaborating with value chain partners. If they cannot do so, they may find themselves shut out, like a homeowner who’s forgotten their key. But if they can, they will unlock the door to new opportunities.
Sources used for this content:
BCG
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