Three emerging megatrends are catalysing new business models and reshaping real estate, says Selina Short, EY.
EY’s 2020 Megatrends Report is the third edition in a series which commenced in 2016 to explore the large, transformative trends disrupting the world.
Short, EY’s managing partner for real estate and construction at Ernst & Young Australia (EY), says many of the trends glimpsed over a distant horizon in 2016 have arrived.
“Rapid technology adoption and other societal changes catalysed by the COVID-19 crisis have suddenly made the megatrends – like the future of work and health reimagined – more near-term than we could have predicted,” explains Short.
“Many of the emerging megatrends will have a fundamental impact on the property industry. CEOs and boards need to focus on megatrends now to remain competitive.”
While the report outlines a host of fascinating trends – from human augmentation to synthetic media – three megatrends will have a “fundamental impact” on the built environment:
1. Work and life unbounded
The COVID-19 pandemic has blurred the boundaries between work and leisure, but Short says we were already on a trajectory towards a “portfolio approach” to life, where people repeatedly rebalance work, leisure and learning.
“The great work-from-home experiment has had an immediate impact on people’s time. Commutes have disappeared and workers have gained a leisure dividend. But this windfall has been accompanied by other challenges, like maintaining separation between personal and work domains and growing feelings of socialisation.
“Structured work plays an important role in our social fabric. Having people gather in central locations, and then giving most of them the same two days off, builds social cohesion. In other words, the workplace builds social capital,” Short says.
“The challenge for property leaders is to create workplace experiences that transcend the physical boundaries of the work environment. The workplace experience will become a critical competitive differentiator – both in the physical office but also in virtual and remote environments.”
Limiting global warming to 1.5°C means cutting global greenhouse gas emissions by about eight per cent every year for the next decade. “A massive economic transformation is ahead,” says Short.
While Australia’s property industry has been “ahead of the curve” in driving down emissions, “big opportunities to decarbonise business models and value chains remain”. EY’s report points to carbon removal solutions like cost-competitive renewables, microgrids, decentralised energy and “the electrification of everything”.
“More than 3,000 patent applications for carbon removal innovations were submitted in the last decade – and this is a sign of what’s ahead”.
Short says the big opportunity for real estate leaders will be in the convergence of energy and property. “Just as the airlines cracked the credit card space, hotel operators merged into healthcare, the property industry is well positioned to drive disruption in the energy market and grab a piece of the $6 trillion carbon capture pie.”
As an invisible virus reshapes our built environment, one of the more “out there” trends on Short’s radar for real estate is microbiomes.
Microbiomes are the microorganisms found in a particular environment – whether a body or a building.
“Harnessing the capabilities of microorganisms has obvious benefits for health and disease prevention, but microbiomes also influence our built landscape,” Short explains.
New tools – including big data, artificial intelligence and synthetic biology – have emerged to mobilise microbiomes. The work of one consortium, MetaSUB, to map the microbiome of 54 global cities has implications for sustainability, security, safety and urban planning.
“The onset of the COVID-19 pandemic has sparked growing concerns about the possible presence of the virus in the microbiome of the built environment. In response, a biotech company has developed an RNA-based COVID-19 test for businesses to test objects, such as door handles, pin pads and handrails, that could carry the virus,” she says.
“We often talk about ‘building ecosystems’ but the science of microbiomes confirms this is literally the case. Harnessing the power of invisible organisms could be transformative for the way we design, build and operate our spaces.”
Digging deep into megatrends is fascinating, but how can property leaders act on the insights?
“The message from studying megatrends is clear. Every real estate business must keep one eye on today and the other eye fixed firmly on the future,” Short says.
“How will you structure your business to drive innovation? Where will you place your bets? How will you allocate resources today to build your capability for tomorrow? These are the questions that CEOs need to be thinking about.”
“The secret is to be deliberate and intentional, using megatrends as an analytical tool to envision where your business will be and then working backward to craft strategies for today.
“This future-back thinking flips the script on the standard approach of projections, plans and strategies. And importantly, it encourages leaders to confront the reality that businesses will be superseded and entire industries redefined.”
Download EY’s 2020 Megatrends Report.
The views expressed in this article are the views of the author, not Ernst & Young. This article provides general information, does not constitute advice and should not be relied on as such. Professional advice should be sought prior to any action being taken in reliance on any of the information. Liability limited by a scheme approved under Professional Standards Legislation.