Revolution impacting real estate

Technology changing habitations

THE rise of global technology giants such as Amazon is increasingly impacting on real estate investing, said UK-based fund manager Tom Walker, co-head of global real estate securities at Schroders.

Walker said the advance of technology in the last century has implications for where we live and how we use buildings.

He said in the past, large employers such as factories could operate outside a city, but large technology companies now needed to be inside a city to attract a well-educated workforce.

This had caused a re-centralisation effect.

“Perhaps the most recent example of this was Amazon’s announcement last year that it was looking for a location for its second headquarters.

“Amazon expects to invest over $ 5 billion ( more than R63bn) in construction and grow this second headquarters to include as many as 50 000 high-paying jobs. Over the next 10 years, this could equate to over 8 million square feet of commercial space,” said Walker.

He said the impact of this and other tech-related factors on which cities would come out tops was massive.

Speaking on how the digital revolution currently impacted all industries, including the real estate sector, especially in the country, Walker said it was impossible to think of any industry that had not been disrupted by digital technology today. “Real estate is no different,” said Walker.

In terms of modern technology and the fourth Industrial Revolution, if one looked at history, when cities were created, the Industrial Revolution had boosted cities’ growth, as manufacturers needed to be near politicians, financiers and where there was an exchange of ideas and innovation.

Walker said historically, the trend was for the younger generation to move to urban locations. In the past, older people tended to move to quieter locations, such as rural areas, but nowadays the elderly were moving into cities, particularly in the more developed countries.

Cities placed less strain on older people, who needed to get medical attention, he said.

“It is easier to use public transport, it is easier to get to medical facilities… (governments) are probably going to encourage people to move into the cities, because that will be the most cost-efficient way to try to deal with an ageing demographic,” Walker said.

joseph.booysen@inl.co.za