Real estate deals with any property associated with land with buildings on it in along with natural resources present there which is an immobile asset of nature. In a more concise way, we can define that buying, selling, building, housing or renting are the matters of concern for real estate.
As per counsellors, the real estate’s are suffering serious threats in year calendar 2018-2019. Increased rate of interest along with the present economic condition is believed to be the two dominant issue affecting real estate to a great extent.
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For the very first time in current and long-term issues, CRE (Commercial Real Estate) broke down in its annual list. Now we have to watch how the industry’ next year is shaping.
Here comes a list of current threats that may affect real estate in the coming year 2019. The threats may be currently threatening or may cause an issue in long-term.
Interest Rates and the Economy:
The real estate dealing with commercial and residential plots have to suffer greatly due to a major increase in the rate of interest. There is a noticeable decrease in demand for property for commercial purposes are one such impact. Moreover, the home mortgage rent is also becoming higher than before.
The increases in rates are making the homes less affordable and commercial sites less appreciable.
Political Uncertainty and their Politics:
Due to reforms in tax policies in order to balance trade with countries throughout the world are making a great impact on incomes and jobs related to both residential and commercial estates.
The step of relaxing certain bank lending in addition to the management of asset regulations may act positively in order to improve the accessibility to the capital source.
Due to high rise in the rate of mortgages are homes are becoming unaffordable for general people. Most wealthy are the exception, but they are minimal in the count. Due to the rise in the rate of nearly all substances, a major portion of houses under construction is also left underproduction. This is the ongoing story from nearly two decades as per the reports.
Change in Demographics (general change):
With time the demography of vast countries changes very rapidly causing a prominent impact on the real estates. Students, elder housing, offices, preference to locations, availability of amenities is some of the distinct generations which influence the residential and commercial estates to a great extent.
Logistics along with E-commerce:
With the rapid increase in the volatility of retail sector such as growth in the rate of E-commerce is leading to an expansion in warehouses affecting the real estate industry.
Issues with Infrastructure:
This is one of the most initial requirements of the real estate industry. The growth rate of construction of bridges, roads, airports, sewer lines etc is not sufficient to meet up the growing need of the industry. These constructions are the preliminary necessities. Moreover, the conditions of the existing ones are also deteriorating day by day. Lack of infrastructure is affecting the growth rate of the industry and thus the need of the hour is the construction of a more developed infrastructure for connectivity purpose.
Enabled efficiency, global connections, the mechanized process of business, cyber security for information protection and other technology for ‘smart’ building is demanding high rates. Manufacturing of robots, warehouses, cars and trucks without drivers modified the process to a high extent. With the adaptation of all these processes, dramatic change in the real estate industry has happened and change takes time to get accepted.
Change in climatic conditions and Natural Disasters:
The threat from nature is always a matter of concern. Storms, earthquakes, thunder burst, wildfire, floods etc are the natural calamities which are a risk factor for the high priced estates causing enormous damage.
As per the reports, this problem is mainly due to a shortage of skilled labours in some area causing a negative effect in new house constructions.
Water and Energy:
The regulations of state and local government complicated the process of development. Natural resources like water are vital for nearly all developmental process is highly damaged by this. There is an urgent need for standardization natural resources can be saved from human interference.
Above mentioned are some of the prominent issues that affected and is going to affect the real estate industry in recent coming years. Moreover, the rising costs of construction, the process of urbanization or suburbanization are some issues which may also affect the industry.
However, cut in tax may impact positively in the commercial properties. The social activism is also acting as a fuel source to the business. Social reforms can reduce the threat at many levels when strategically implied.