Cities are becoming more and more populated, the available real estate is scarce, and we need to optimize the utilization of our already limited space in urban areas more than ever before. However, we can't look just at the properties in isolation - mobility solutions play a significant role in shaping real estate and its future.
Today’s transportation systems have exhausted their capabilities to keep the world moving, mostly because the way our world moves has changed quite a bit. We as a society have to expand our perspective on mobility, what it entails and what new technologies and service providers could emerge.
Real estate is about location, and mobility is changing that
Let's see where the real estate industry stands and what the future could look like.
We don't want to talk about the distant utopian ideas of shapeshifting skyscrapers that are connected by flying gardens, hovering cars, drone deliveries, and underground tunnels. we'd like to focus on more attainable innovation in the mid and shorter term.
What has been the very foundation of real estate? You guessed it right: it's location. In the new era of mobility, the significance of it might get lower. As you might have seen in the news, traditional automotive OEMs and new entrants in the space are now developing driverless cars. Regular vehicles transformed cities during the last century. Now, another change is about to happen.
If we're creating cars that don't need a driver, we can also have buildings with no parking lots. If the buildings of the future don't have parking, our cities will be unlike anything we are familiar with today. Nowadays cities and urban areas mainly consist of separated neighborhoods and areas for specific kinds of buildings and use. We have built wide and long highways to connect them and we have developed large parking areas so everyone can have a designated space to leave their car when they arrive at their destination. It is also not uncommon for the parking space to be bigger than the building itself. Cars take up a lot of space that could certainly be repurposed to benefit the city dwellers when autonomous vehicles become reality.
Currently, mobility forms the backbone of our lives and the surrounding environment. Cities and urban metropolitan areas are heavily congested. There are not that many reliable and sustainable options for mass transit or private transport. The public transit structure is highly inefficient because the processes are not transparent, mobility data is siloed and the systems, for the most part, are outdated. Privately-owned vehicles typically are just for personal use and take up a lot of space to transport just one person. Ridesharing service provider’s vehicles are often idle, just cruising around the city while waiting for an occasional rider until rush hour hits.
When do we give up car ownership?
First, the idea of not having a car due to autonomy might not happen. Policy will not allow cars to move on their own without a qualified driver or passenger in it unless in a city with designated areas for pickup/drops similar to buses. Second, it's hard to imagine robotaxis co-existing with other rather unpredictable human-driven cars on the road unless there's enough redundancy enabled by self-driving technology both on the vehicle and in the surrounding infrastructure.
Additionally, since the driver/passenger will not have to do any driving task, in the early days of self-driving car services people would likely have to monitor the health of the car or roads.
Instead of location, let's focus on the journey
Therefore, real estate today and in the future is not really that much about the location, but rather about transportation, about how to get there and how both domains complement each other. There is no doubt the industry will shift, and we need to be prepared for that. The future of real estate is coming up against the trends of urbanization, demographic changes, as well as technological disruption.
We can expect a substantial increase in urban investable real estate globally, especially in emerging markets. Cities globally are focusing on building themselves to be centers of business and wealth creation. As the construction activity is rapidly increasing, we can also expect to see more contributions to the future of real estate from cities across Asia, Africa, the Middle East, and Latin America. Overall, the total construction output globally is projected to reach $14 trillion by 2025.
Our cities are rapidly growing and likely will continue to expand in the future too. Technological advancements in other domains such as transportation could free up lots of our personal resources as well as space in the urban areas. As discussed earlier in the article, the introduction of autonomous vehicles will drive not only us around, but also the future of cities and real estate. There are quite a few practical benefits that self-driving cars could provide us. For example:
- Savings - people will not need to own a car. That way we will have the opportunity of repurposing garages and driveways. Savings from the transportation industry can be used for new housing opportunities. Parking lots could be turned into parks, driveways could become patios. Autonomous revolution can be, and I'd like to emphasize, should be rather about people and places and property value, and not robots. Cities could become more inclusive, more mobile, people with disabilities would be able to access all kinds of places because they don't need anyone to drive them.
- Increase in productivity - people will be able to work as they go home (#Ford AR Patent). We'd be able to afford a home where we want it, and not really try to optimize for a shorter commute. This aspect is enough to make a person choose a home that is a bit further away than what is acceptable today to save on real estate or rent. The savings could also be used to buy a bigger property for example by installing more solar panels to live in luxury of cheap, redundant power for the house.
- Infotainment - people will consume (if not create) content on the go. Windows could become screens, the steering wheel might be a desk. People could enjoy the commute, the commute could be cheaper by eliminating the human driver. Companies could tap into larger labor markets, open new business locations, open new business operations and invent new products.
Real Estate & Mobility: It's time for a paradigm shift
Our cities are busy and congested because the currently used systems are inefficient to serve the growing population of urban dwellers. Technological advancements in the automotive space are just one example of how the existing status quo will be challenged to move the needle more in favor of society and our metropolitan environment instead of underutilized cars. Knowing that the most valuable real estate properties today tend to be in the dense urban core of major cities around the globe, it follows that prime real estate will only increase further in value.
Location will become ubiquitous and the power will be in our hand in the form of a smartphone. We can get to places faster without worrying - are we there yet. Cities can be repurposed and redesigned. The developments could be pushed further out of the cities.
If we go back to the very beginning of the article where I talk about congestion and traffic, we can now actually understand the underlying problem is density. Nowadays, as home prices rise and the available land becomes scarce there is an increasing pressure to make homes smaller and increase the number of homes per acre of land. In addition to that, our huge parking lots could provide more space for new developments and affordable housing.
If we do things right, we don't have to think about how mobility will shape the future of real estate. Mobility will be the future of real estate and our lives overall.