Megatrends may also affect the supply side either by creating excesses or shortages. For example, the megatrend of a rapidly increasing senior-citizen cohort, both in absolute numbers, but also as a percentage of the total population in the next 20 years, will shape new location and property demand patterns in terms of housing types, location preferences, vacation/leisure facilities and other property products that may cater to the preferences of this group.

As discussed in an article below, another good example of the impact of megatrends on real estate is the continuing globalization of the world’s economic and social structure and the increasing importance of airport cities in this global network. The possibility of supersonic travel and its mass commercialization could create another megatrend that can give to the word globalization a whole new dimension and could profoundly affect the land use and property value patterns in the major urbanized areas around the globe. Will it happen in the current century? Read the article below on supersonic travel to see how likely this is.

A paper by L. Lachman of the Institute for Fiduciary Education spells out twelve real estate megatrends that are expected to have a significant impact on US property dynamics, reshape the relative performance of the different property types and their risk profile,  generate shifts in locational demand and change property-value patterns.  These twelve real estate megatrends include:

1. the acceleration of geographic dispersion of both households and businesses to suburbia and exurbia at the expense of central cities;

2. the continuing importance of baby boomers in driving the residential and retail real estate markets, which will sustain strong demand for second/third homes/condos , interval ownership, resort vacations, etc.;

3. the upcoming echo-boom entrance in the marketplace expected to generate a strong demand for apartments and boost retail sales and entertainment expenditures, generating in this way additional retail space demand by retailers;

4. the growth of niche markets due to increasing population diversity, a trend that will favor projects and services that are targeted towards specific population groups;

5.  the gradual establishment of real estate investments as fixed-income yield enhancers;

6.  the increasing capital flows to real estate on the merits of the high income return that it provides;

7. the transformation of opportunity funds to value enhancers providing lower returns as low interest rates and readily available mortgage money have reduced distressed debt; this prediction though may not hold though as we see that rising interest rates have already started  generate distressed debt opportunities;

8.  the shift of benefit plans to a “cash balance” management approach that favors investments in real estate due to the strong income returns they provide;

9. the growing dominance of large firms, but also the continuing flourishing of small firms, in the real estate industry;

10. the growing realization of the benefits of environmental sustainability, which will boost demand for “green buildings” and smart growth;

11. the  increasing outsourcing of the skilled service jobs in engineering, loan servicing, billing operation etc. to non-US based operations, which will have a negative impact in demand for office space; and