TORONTO — Altus Group Limited recently released the Global Property Development Trends Report, which provides an outlook of the property development industry and delivers insight into the key business measures developers are implementing to build resilience in the “new normal.”
According to the report, which is based on a global survey of over 400 property development executives along with interviews with top industry leaders, the pandemic has been a catalyst for change in the industry by accelerating trends, intensifying challenges and renewing the urgency for digital transformation and technology adoption, states a release.
The report found that current market forces, combined with COVID-19, are creating significant uncertainty leading to a wait-and-see approach.
- 67 per cent of development executives said tenant/occupier expectations and preferences have a major influence on development planning.
- 74 per cent said public sector infrastructure investment (such as transit hubs) has a major influence on development planning.
- 68 per cent said that the risk of a cycle downturn has a significant impact on their decisions regarding new construction investments, with distressed asset acquisitions (57 per cent) and change in asset/portfolio mix (66 per cent) viewed as more of a risk than an opportunity during a cycle downturn.
The report also said the pandemic intensifies top challenges facing development firms. including disruption to construction sites.
- 73 per cent of development executives said project cost escalation is a significant challenge facing development firms, followed by environmental regulations (70 per cent), government policies and processes (65 per cent), and trade and labour shortages (65 per cent).
- COVID-19 has amplified existing challenges with increased trade and labour shortages, physical distancing requirements on construction sites impacting productivity, construction site halts in certain regions, and the complexity of government policies and processes.
Recognition that adoption of digital transformation and technology must be fast-tracked was another finding of the report.
- 52 per cent of development executives are considering or planning to use digital transformation strategies to mitigate business challenges, and 37 per cent are already doing so.
- 56 per cent are considering or planning to use data analytics to mitigate business challenges, and 28 per cent are already doing so.
“It’s evident from the report that the global development sector is facing a complex set of challenges due to long-term market pressures, many of which are exacerbated by the pandemic and its evolving impacts,” said Scott Morey, executive director at Altus Group, in a statement. “However, the industry is recognizing opportunities balanced with a cautious approach while leveraging digital-based solutions as a foundation to help carry it through this period of uncertainty and into the recovery stage.”