For the real estate sector, obsolescence has been as old a challenge as the industry itself. Developments degenerate, and their appeal declines with time and changing perceptions and expectations of people. However, today, this challenge has become far more complex and pressing. Rapidly changing consumer trends, catalysed by the constant evolution of technology, demographics and social structures, are raising more questions than answers for real estate professionals, who need a whole new perspective on how real estate is designed, built, and managed.
Dubai’s real estate landscape is a prime example of changing consumer trends. What was once a sought-after destination for global investors, is evolving into a mature market where people are looking for homes, not just assets.
The city’s diverse demographics also gives us a glimpse of how consumer trends are shapeshifting on a global scale. Additionally, the government, with its numerous initiatives to drive a knowledge-based, diverse economy, is building a robust foundation for the city’s future.
The time is ripe for change in the city’s approach to real estate; and the industry players who will survive and thrive on this change, will be the ones who recognise one simple, yet profound fact – that real estate is a consumer-driven business and a service in and of itself.
Understand the demographics
Today, millennials are driving consumer trends not just among their demographic, but across a cross section of the population. For real estate developers, understanding this demographic is vital. However, this task is easier said than done.
Millennials are by far the most diverse generation of all time. Their likes, dislikes, aspirations, and motivations are spread out, and for any business, it is essential to consider this diversity and stay away from generalisation. We need to continually look for factors that connect them and those that differentiate them.
With the rise in co-living and co-working trends, it is clear that today’s customers are looking at real estate as a service. They are looking to rent or buy homes that exist in wholesome communities where they can interact with others who share common beliefs and aspirations. At the same time, they also want to live in spaces that align with their individuality.
Let’s face it, technology is now synonymous to life, and consumers are continually being exposed to the next big revolution in convenience and user experience.
Technology, particularly mobile and digital, has put the consumer back into the driver’s seat, and the way they interact with businesses across the board has changed completely. Hence, the real estate sector must embrace technology, not just to build better and more efficiently, but to connect with consumers and enable them through seamless services.
Rethink investors’ returns
Besides coming up with new ways to engage community members and leveraging technology to enable them, developers must also create new and innovative channels to bring returns for investors.
Traditionally, there are two primary sources of returns for real estate investors – long-term rental yields and capital returns. Real estate developers can play a crucial role in further diversifying returns for investors.
The real estate industry needs to move away from a one-dimensional approach that revolves around ‘placemaking’ and adopt a more rounded strategy. To become developers of the future, we need to develop skills that were probably not required a few years ago.
We need to be innovative in terms of what we offer our customers. We must shift our values away from the physical to the service aspects of real estate. Above all, we have to work extensively on understanding the people we serve.
Amira Sajwani is senior vice president, Operations, at DAMAC Properties
Source: Gulf Business