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Decade of Disruption: Global Real Estate CEOs Plan for Industry Transformation

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The real estate industry needs to transform to serve the needs of people and cities in the next decade, according to a new report released today by the World Economic Forum. COVID-19 has revealed vulnerabilities throughout the real estate industry, ranging from indoor air quality problems to excess supply and accelerated underlying demand drivers, which need to be addressed for buildings and cities to be healthier, prosperous and more sustainable.

The new World Economic Forum report, “A Framework for the Future of Real Estate,” acts as a road map for industry change. Developed with global real estate chief executives, the framework provides a pathway to transform buildings and cities to become liveable, sustainable, resilient and affordable.

“Real estate stands at a crossroads as cities adjust to the new realities of a post-COVID era, climate change and the Fourth Industrial Revolution,” said Jeff Merritt, Head of IoT and Urban Transformation at the World Economic Forum. “This transformation of real estate – and the market disruption that comes along with it – is long overdue but, if fully embraced, promises to help us all live healthier, happier and more connected lives.”

“Today the real estate industry is facing challenges and consequently is given a chance to do better, to take more steps towards a healthier future and to make a global sustainable impact,” says Coen van Oostrom, Founder and Chief Executive Officer, EDGE, OVG Real Estate. “To optimize buildings, not only should we rethink spaces, users’ behaviours, and energy efficiency but we should also bring a stronger focus on redevelopment opportunities, circular economy, and digitalization. Let us stop waiting for others to set the example and start today, by committing to everyday incremental changes. Ultimately, we must keep a close eye on the bigger picture to be leaders in the transition to a more sustainable way of operating.”

For more than a decade, the real estate industry has experienced tremendous profitability with successful growth rates and rising investment volumes with +14% compound annual growth rates. Initially, this success put less pressure on industry leaders to innovate, but now the industry is coming under pressure from consumers, investors and regulators to better serve the health and resilience of their communities. At the same time, the lasting effects of the pandemic and the acceleration of existing trends have brought the industry to a tipping point.

“The pandemic has accelerated changes in work and lifestyles that had already been gathering pace over recent years, driven in large part by new technology,” said Christian Ulbrich, Global Chief Executive Officer and President, JLL. “As we plan for a sustainable global post-pandemic recovery, this World Economic Forum framework shows how our industry has a vital part to play in coming together to shape the future of real estate for a better world.”

The Future of Real Estate Framework identifies key enablers real estate leaders can use to ensure they are working throughout the industry to provide real estate options that are liveable, sustainable, resilient and affordable.

Key enablers

  • Accelerating digitalization and innovation to address everything from construction costs to the occupant experience
  • Value-proof business cases that are transparent and demonstrate a clear return on investment in relation to technology, sustainability and affordable housing
  • Prioritizing talent and knowledge by upskilling existing workers and attracting talent dedicate to areas of innovation while ensuring diversity and inclusion
  • Engaging stakeholders, throughout the industry value chain and within the local community, to ensure projects are mutually beneficial
  • Ensuring regulatory frameworks effectively address supply challenges, sustainability goals and provide proper zoning and density

The framework also includes case studies from various real estate companies and exemplify the vision of the four key pillars of liveable, sustainable, resilient and affordable buildings and cities.

Industry action

Industry leaders have already taken decisive action towards transformation throughout the real estate industry. Gensler’s GC3 Commitment aims to achieve net zero by 2030 in all Gensler projects and JLL’s work with the Washington Metro will provide clean energy to more than 1,500 homes.

Swire Properties has joined the Business Ambition for 1.5°C campaign and Lendlease has pledged to harness digitization to be net carbon zero by 2025 and absolute carbon zero by 2040.

Majid Al Futtaim has become the first and only conglomerate in the world to achieve LEED Platinum certification for its entire portfolio of hotels.

Signify has embraced sustainability and resilience by developing and deploying UV-C disinfection systems, an energy efficient and chemical-free way to sanitize buildings.

Schneider Electric has set clear, measurable 2025 targets around sustainability to achieve 80% green revenues, deliver 800 million tons of saved and avoided emissions to their customers and have 1000 of their top suppliers reduce emissions by 50% from their operations.

Learnings from these companies’ initiatives and many others were used to help develop the Future of Real Estate Framework which aims to accelerate these types of transformation across the industry.

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Post-COVID-19, regaining citizen’s trust should be a priority for governments

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coronavirus people

The COVID-19 crisis has demonstrated governments’ ability to respond to a major global crisis with extraordinary flexibility, innovation and determination. However, emerging evidence suggests that much more could have been done in advance to bolster resilience and many actions may have undermined trust and transparency between governments and their citizens, according to a new OECD report.

Government at a Glance 2021 says that one of the biggest lessons of the pandemic is that governments will need to respond to future crises at speed and scale while safeguarding trust and transparency. “Looking forward, we must focus simultaneously on promoting the economic recovery and avoiding democratic decline” said OECD Director of Public Governance Elsa Pilichowski. “Reinforcing democracy should be one of our highest priorities.”

 Countries have introduced thousands of emergency regulations, often on a fast track. Some alleviation of standards is inevitable in an emergency, but must be limited in scope and time to avoid damaging citizen perceptions of the competence, openness, transparency, and fairness of government.

 Governments should step up their efforts in three areas to boost trust and transparency and reinforce democracy:

 Tackling misinformation is key. Even with a boost in trust in government sparked by the pandemic in 2020, on average only 51% of people in OECD countries for which data is available trusted their government. There is a risk that some people and groups may be dissociating themselves from traditional democratic processes.

 It is crucial to enhance representation and participation in a fair and transparent manner. Governments must seek to promote inclusion and diversity, support the representation of young people, women and other under-represented groups in public life and policy consultation. Fine-tuning consultation and engagement practices could improve transparency and trust in public institutions, says the report. Governments must also level the playing field in lobbying. Less than half of countries have transparency requirements covering most of the actors that regularly engage in lobbying.

 Strengthening governance must be prioritised to tackle global challenges while harnessing the potential of new technologies. In 2018, only half of OECD countries had a specific government institution tasked with identifying novel, unforeseen or complex crises. To be fit for the future, and secure the foundations of democracy, governments must be ready to act at speed and scale while safeguarding trust and transparency.

 Governments must also learn to spend better, according to Government at a Glance 2021. OECD countries are providing large amounts of support to citizens and businesses during this crisis: measures ongoing or announced as of March 2021 represented, roughly, 16.4% of GDP in additional spending or foregone revenues, and up to 10.5% of GDP via other means. Governments will need to review public spending to increase efficiency, ensure that spending priorities match people’s needs, and improve the quality of public services.

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Sweden: Invest in skills and the digital economy to bolster the recovery from COVID-19

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Sweden’s economy is on the road to recovery from the shock of the COVID-19 crisis, yet risks remain. Moving ahead with a labour reform to facilitate adaptation in a fast-changing economic environment, and investing in digital skills and infrastructure, will be crucial to revive employment and build a sustainable recovery, according to the latest OECD Economic Survey of Sweden.

The pandemic triggered a severe recession in Sweden, despite mild distancing measures and swift government action to protect people and businesses. GDP fell by less than in many other European economies in 2020, thanks to reinforced short-time work, compensation to firms for lost revenue and measures to prop up the financial system, but unemployment still rose sharply. Solid public finances provided room for further stimulus in 2021 to buttress the recovery.

 The Survey recommends maintaining targeted support to people and firms until the pandemic subsides, then focusing on strengthening vocational training and skills and increasing investment in areas like high-speed internet and low-carbon transport. Addressing regional inequality, which is low but rising, should also be a priority as the recovery takes hold.

 The Survey shows that Sweden has been among the most resilient OECD countries in the face of a historic shock. Yet, like other economies, it faces challenges from demographic changes and the shift to green, digital economies. Investments in education and training, and labour reforms along the lines negotiated by the social partners, will support job creation and strengthen economic resilience. Building on Sweden’s leadership in digital innovation and diffusion will also be key for driving productivity.

 After a 3% contraction in 2020, interrupting several years of growth, the Survey projects a rebound in activity with 3.9% growth in 2021 and 3.4% in 2022 as industrial production resumes and exports recover. The recovery in world trade is bolstering the Swedish economy, however the country remains vulnerable to potential disruptions in global value chains.  

The pandemic has aggravated a mismatch in Sweden’s job market, with unfilled vacancies for highly qualified workers coinciding with high unemployment for low-skilled workers and immigrants. The public employment service needs strengthening to provide better support to jobseekers, including immigrants and women, and labour policies should strike the right balance between supporting businesses and workers and supporting transitions away from declining businesses towards growing sectors.

A rising share of youths and older people in the population, especially in remote areas, is affecting the finances of local governments, which provide the bulk of welfare services. Strengthening local government budgets and ensuring equal welfare provision across the country will require providing tax income to poorer regions more efficiently and raising the economic growth potential across regions through investments in innovation. Improving coordination between government entities and reinforcing the role of universities in local economic networks would help achieve that aim.

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Fewer women than men will regain work during COVID-19 recovery

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Generations of progress stands to be lost on women and girls' empowerment during the COVID-19 pandemic. Photo: ILO

Fewer women will regain jobs lost to the COVID-19 pandemic during the recovery period, than men, according to a new study released on Monday by the UN’s labour agency.  

In Building Forward Fairer: Women’s rights to work and at work at the core of the COVID-19 recovery, the International Labour Organization (ILO) highlights that between 2019 and 2020, women’s employment declined by 4.2 per cent globally, representing 54 million jobs, while men suffered a three per cent decline, or 60 million jobs. 

This means that there will be 13 million fewer women in employment this year compared to 2019, but the number of men in work will likely recover to levels seen two years ago. 

This means that only 43 per cent of the world’s working-age women will be employed in 2021, compared to 69 per cent of their male counterparts. 

The ILO paper suggests that women have seen disproportionate job and income losses because they are over-represented in the sectors hit hardest by lockdowns, such as accommodation, food services and manufacturing. 

Regional differences 

Not all regions have been affected in the same way. For example, the study revealed that women’s employment was hit hardest in the Americas, falling by more than nine per cent.  

This was followed by the Arab States at just over four per cent, then Asia-Pacific at 3.8 per cent, Europe at 2.5 per cent and Central Asia at 1.9 per cent. 

In Africa, men’s employment dropped by just 0.1 per cent between 2019 and 2020, while women’s employment decreased by 1.9 per cent. 

Mitigation efforts 

Throughout the pandemic, women faired considerably better in countries that took measures to prevent them from losing their jobs and allowed them to get back into the workforce as early as possible. 

In Chile and Colombia, for example, wage subsidies were applied to new hires, with higher subsidy rates for women.  

And Colombia and Senegal were among those nations which created or strengthened support for women entrepreneurs.  

Meanwhile, in Mexico and Kenya quotas were established to guarantee that women benefited from public employment programmes. 

Building forward 

To address these imbalances, gender-responsive strategies must be at the core of recovery efforts, says the agency. 

It is essential to invest in the care economy because the health, social work and education sectors are important job generators, especially for women, according to ILO. 

Moreover, care leave policies and flexible working arrangements can also encourage a more even division of work at home between women and men. 

The current gender gap can also be tackled by working towards universal access to comprehensive, adequate and sustainable social protection. 

Promoting equal pay for work of equal value is also a potentially decisive and important step. 

Domestic violence and work-related gender-based violence and harassment has worsened during the pandemic – further undermining women’s ability to be in the workforce – and the report highlights the need to eliminate the scourge immediately. 

Promoting women’s participation in decision-making bodies, and more effective social dialogue, would also make a major difference, said ILO. 

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