The global development industry has grown in complexity over the last few decades. According to a recent report looking into development trends, the Altus Group has found that many factors contribute to this complexity, and the interpretation and anticipation of factors affecting market forces, such as macro and micro-economic factors, policy and regulation changes and infrastructure and transportation, are key to guiding profitability.
These factors, amid numerous others, have made adaptability an essential component of successful developers. When looking at global feedback, a surprisingly consistent response points to a few major challenges agreed upon by international developers. These are centered upon the factors driving the market change and are challenges that need to navigate carefully for continued success.
The report uses data from a survey by IDC (research firm) conducted in May 2018, collected from developers in North America, Europe, Middle East, Asia-Pacific, and Latin America. The highest levels of development activity were found in the United States, Canada, Australia and in the United Kingdom.
Factors affecting development
It was found that affordability of housing, immigration numbers and public infrastructure are supporting continual development, while the changing use of real estate, cross-border trade policies and current technology in transportation may have negative impact on market demand. Investors are doing their best to mitigate the effect of these negative factors.
While developers agree on the biggest market force drivers, they have varied ways to navigate these. Those in strong positions to prosper are spending time and personnel on predicting and preparing for future trends.
Concerns and uncertainty
Cost escalation is a major concern, as is labor shortage and development approval processes. Significant change in project funding strategies has alternative finance options being utilized by 82%, and joint projects and partnerships are being favored by 62%. Building design change and new market expansion are regularly employed by those focused on minimizing losses at this time.
Recent technological advances are causing uncertainty, with long reaching effects as yet unknown. Innovations such as 3D printing, virtual reality and process automation are considered as potential game changers, but the far-reaching impact of these cannot be known at this time.
Devising best practice solutions
It is thought that improved practices can be achieved through benchmarking across the industry, with leaders focusing on building design change and incorporating new construction technologies.
Emerging trends are having significant effects upon market forces, and, although experienced leaders are seeing these as opportunities, rapid change is proving troublesome for some. By looking at current concerns, and devising best practice solutions, the wise developer is set to ride the wave of continuing profitability by embracing adaptable solutions to potential problems.
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